There Are People Who Believe That the Analysis of Financial

question 45

Multiple Choice

There are people who believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis?

• A) Ratio analysis requires the analyst to evaluate a firm's performance over a period of time to be of any value.
• B) Proper ratio analysis requires the analyst to rely upon audited financial statements, which can be easily manipulated.
• C) Thorough ratio analysis requires the analyst to refer to benchmarking, which is very easy to misinterpret.
• D) Ratio analysis requires the analyst to utilize accounting data that is based on historical costs instead of current market values.

---

Definitions:

Contract Failure

A situation where the market fails to provide an efficient outcome, leading to a gap that nonprofits often aim to fill.

Open System

An organizational or systemic concept where continuous interaction with the environment is necessary for sustainability and growth.

Nonprofit Organization

An entity that operates for a purpose other than making a profit, often focusing on philanthropic, educational, or social missions.

Organizational Culture

The shared values, beliefs, norms, and practices that shape the social and psychological environment of a business or organization.