Which of the Following Is NOT a Reason Why Financial

question 51

Multiple Choice

Which of the following is NOT a reason why financial analysts use ratio analysis?

• A) Ratios help to pinpoint a firm's strengths.
• B) Ratios restate accounting data in relative terms.
• C) Ratios are ideal for smoothing out the differences that may exist when comparing firms that use different accounting practices.
• D) Some of a firm's weaknesses can be identified through the usage of ratios.

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Definitions:

Closure

The psychological phenomenon where an individual seeks a sense of completeness or resolution to an emotional or traumatic event.

Similarity

The cognitive process of recognizing objects or ideas that are alike in appearance or concept.

Texture Gradient

This visual cue indicates depth by the gradual change in appearance of objects as they move further away, with details becoming denser and finer the farther they are from the viewer.

Relative Size

A perceptual cue that allows the determination of the size of an object in comparison to another object of known size.