Ratios Provide Little Information Unless the Analyst Places Them in a Context.After

question 144

Multiple Choice

Ratios provide little information unless the analyst places them in a context.After calculating the ratios, the analyst must compare them with some standard.Which of the following is/are possible standard(s) ?

• A)The planned ratio for the period.
• B)The corresponding ratio during the preceding period for the same firm.
• C)The corresponding ratio for a similar firm in the same industry.
• D)The average ratio for other firms in the same industry.
• E)All of the above are possible standards.

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Definitions:

Calculate

Determine mathematically.

Percent Change

The extent to which a quantity has increased or decreased, expressed as a percentage.

Initial Value

The starting monetary or numerical value of an investment, account, or another financial instrument before any earnings or losses.

Reduction

The act of making something lesser in size, amount, or degree.