Which of the Following Is a Limitation of Ratio Analysis

question 68

Multiple Choice

Which of the following is a limitation of ratio analysis?

• A) Ratios depend on accounting data based on historical costs.
• B) Differences in accounting practices like FIFO versus LIFO make comparison difficult.
• C) Trend analysis could be distorted by financial statements affected by inflation.
• D) All of the above are limitations of ratio analysis.

---

Definitions:

Oral Communication

Communicating thoughts or information by speaking.

Situations

Refers to a set of conditions or circumstances at a given time.

Intrinsic Motivators

Internal factors or desires that drive an individual to perform or engage in an activity for its own sake, without external rewards.

Extrinsic Motivators

Incentives that motivate individuals to perform tasks based on external rewards or avoidances of negative outcomes.