Ratio Analysis Is Least Likely to Indicate

question 32

Multiple Choice

Ratio analysis is least likely to indicate:

• A) past performance.
• B) future performance.
• C) the effects of inflation.
• D) trends in a company's performance.

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Definitions:

Foreign Subsidiary

A company owned or controlled by another company (the parent company) but located and operating in a foreign country.

Cumulative Translation Adjustment

An entry in the accumulated other comprehensive income section of a translated balance sheet summarizing the gains or losses from currency translation differences.

Remeasurement Gain or Loss

A financial result that occurs when the value of a foreign currency transaction is adjusted to reflect exchange rate changes at the balance sheet date.

Parent Company

A corporation that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.