Which of the Following Statements Concerning Financial Ratios Is Incorrect

question 32

Multiple Choice

Which of the following statements concerning financial ratios is incorrect?

• A)Accounting principles and methods used by a company will not affect financial ratios.
• B)The informational value of a ratio in isolation is limited.
• C)A ratio is one number expressed as a percentage or fraction of another number.
• D)Calculation of financial ratios is not sufficient for a complete financial analysis of a company.

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Definitions:

Representative

Someone or something that serves as a typical example or is characteristic of a group, class, or set.

Demand Characteristics

Aspects of an experimental setting that lead participants to guess the purpose of the study and adjust their behavior to what they think the experiment demands.

Inadvertently Smiles

Smiling unintentionally or without conscious decision, often as a natural reaction to certain stimuli or thoughts.

Validity of Measure

Refers to the degree to which a test or instrument accurately measures what it intends to measure.