Which One of the Following Statements Is Correct Concerning Ratio

question 70

Multiple Choice

Which one of the following statements is correct concerning ratio analysis?

• A)A single ratio is often computed differently by different individuals.
• B)Ratios do not address the problem of size differences among firms.
• C)Only a very limited number of ratios can be used for analytical purposes.
• D)Each ratio has a specific formula that is used consistently by all analysts.
• E)Ratios can not be used for comparison purposes over periods of time.

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Definitions:

Perfect Competitor's Demand Curve

A horizontal line reflecting a perfectly elastic demand situation where the firm can sell any quantity at the prevailing market price.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely or extremely to changes in price.

Highly Inelastic

Describes demand that is hardly responsive to changes in price, typically for necessities where consumption does not decrease significantly with a price increase.

Total Profit

The overall financial gain made by a business after subtracting all expenses from total revenue.