Which of These Is Not Considered a Limitation of Financial

question 65

Multiple Choice

Which of these is not considered a limitation of financial ratio analysis?

• A)Ratios are difficult to calculate.
• B)It does not consider qualitative factors.
• C)There is no adjustment for the effects of inflation.
• D)All of the above.

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Definitions:

Returns to Scale

The rate at which output changes if the scale of all inputs is changed by the same proportion.

Output Level

The amount of product or service that is produced by a company or an economy at a given time.

Isoquants

Curves representing combinations of inputs which yield the same level of output in production theory, illustrating technical substitution and factor combinations.

MRTS

Marginal Rate of Technical Substitution; the rate at which one input must increase when another input decreases to keep output constant.