All of These Are Limitations of Financial Ratio Analysis Except

question 18

Multiple Choice

All of these are limitations of financial ratio analysis except:

• A)Year-end data is not necessarily typical of the position during the year
• B)It is past performance that is being analysed
• C)Suitable yardsticks may not be available with which to compare results
• D)Excessive information disclosed in company annual reports

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Definitions:

Perfectly Elastic

Refers to a situation in economic theory where a small change in price leads to an infinite quantity demanded or supplied.

Increasing-Cost Industry

An industry in which the cost of production per unit increases as the total output of the industry increases, typically due to resource limitations or regulatory costs.

Consumer Demand

It refers to the desire of consumers to purchase goods and services, combined with their purchasing power, at a given price level and time.

Economic Adjustments

Modifications in market behavior or policies aimed at correcting imbalances and achieving economic stability or growth.