Which one of the following statements is correct concerning ratio analysis?
A) A single ratio is often computed differently by different individuals.
B) Ratios do NOT address the problem of size differences among ﬁrms.
C) There is only a very limited number of ratios which can be used for analytical purposes.
D) Each ratio has a speciﬁc formula that is used consistently by all analysts.
E) Ratios can NOT be used for comparison purposes over periods of time.

Question

Quizplus · Accepted Answer

Different individuals or organizations may compute a single ratio differently due to variations in definitions or interpretations of financial statement items.

Which One of the Following Statements Is Correct Concerning Ratio