One Simplifying Characteristic of Ratio Analysis Is That Once We

question 65

True/False

One simplifying characteristic of ratio analysis is that once we have created common size statements,the benchmarking of industry ratios becomes redundant because all industries have the same ratios when using common size values.

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Definitions:

Active Approach

is a strategy in management or investing that involves taking specific actions to achieve a particular goal, as opposed to a passive or laissez-faire approach.

Natural Adjustments

Natural adjustments refer to the self-correcting mechanisms of markets or economies that respond to imbalances or disruptions without the need for external intervention.

Expansionary Gap

A situation where the actual output of an economy exceeds its potential output, typically characterized by increasing prices.

Self-corrects

Refers to the ability of a market or economic system to automatically adjust and return to equilibrium without outside intervention.