Ratio Analysis Is a Useful Managerial Tool That Can Help

question 75

True/False

Ratio analysis is a useful managerial tool that can help business owners maintain financial control over their businesses, but it is of no use to a business owner trying to obtain a bank loan.

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Definitions:

Net Income

The remaining profit of a corporation once every expense, tax, and additional cost is deducted from the overall revenue.

Amortization Expense

The gradual write-off of the cost of an intangible asset over its useful life.

Equity-Method

An accounting technique used to record investments in affiliate companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profits or losses.

Operating Activities

Activities that relate directly to the operation of a business, including sales revenue and expenses, reflected in the cash flow statement.