Relying on Absolute Values in an Entity's Financial Statements to Predict

question 9

Multiple Choice

Relying on absolute values in an entity's financial statements to predict future risks is not meaningful because:

• A) an increase in the profit figure does not necessarily indicate an increase in the profitability of the entity.
• B) an increase in non-current liabilities does not necessarily mean the entity has become more reliable on external funding.
• C) an increase in current liabilities does not necessarily mean the entity is having liquidity problems.
• D) all of the above statements are correct.

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Definitions:

Genes

Units of heredity made up of DNA that encode for the synthesis of proteins, influencing various traits and characteristics of an organism.

DNA

DNA, a molecule responsible for carrying the genetic blueprints essential for the growth, development, functioning, and reproduction of every known living being.

Chromosomes

Structures within cells that contain DNA and carry genetic information, with humans typically having 23 pairs.

Lateralization

The propensity of particular cognitive functions or neural activities to be more pronounced in one hemisphere of the brain than in its counterpart.