All of the following statements are true regarding ratios and forecasts except:
A) Ratios cannot confirm whether forecast assumptions will turn out to be correct.
B) Ratios can tell whether future sales growth was accurately captured.
C) Ratios cannot tell whether assumptions about future cash flows are realistic.
D) Ratios can tell whether growth rates for sales are consistent with past sales growth performance.

Question

Quizplus · Accepted Answer

Ratios can provide insights into past performance, but they do not directly predict or confirm future outcomes. Therefore, statement B is not entirely true as ratios can only provide indications of whether sales growth has been consistent in the past, but not whether it will be accurately captured in the future.

All of the Following Statements Are True Regarding Ratios and Forecasts