All of the Following Statements Are True Regarding Ratios and Forecasts

question 44

Multiple Choice

All of the following statements are true regarding ratios and forecasts except:

• A) Ratios cannot confirm whether forecast assumptions will turn out to be correct.
• B) Ratios can tell whether future sales growth was accurately captured.
• C) Ratios cannot tell whether assumptions about future cash flows are realistic.
• D) Ratios can tell whether growth rates for sales are consistent with past sales growth performance.

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Definitions:

Equity

The value of an owner's interest in a property, calculated by subtracting liabilities from the value of an asset.

Functional Currency

The currency of the primary economic environment in which an entity operates and carries out its transactions.

Presentation Currency

The currency in which financial statements are presented. This may differ from the functional currency in which transactions are recorded.

Accounts Receivable

Money owed to a company by its debtors for goods sold or services rendered on credit.