Ratios provide little information unless the analyst places them in a context.After calculating the ratios, the analyst must compare them with some standard.Which of the following is not a possible standard?
A)The planned ratio for the period.
B)The corresponding ratio during the preceding period for the same firm.
C)The corresponding ratio for a similar firm in the same industry.
D)The average ratio for other firms in the same industry.
E)The corresponding ratio during the succeeding period for the same firm.

Question

Quizplus · Accepted Answer

Ratios are compared to historical data, industry averages, or planned targets to assess performance. Future ratios (succeeding period) cannot serve as a standard for current analysis because they are unknown at the time of comparison.

Ratios Provide Little Information Unless the Analyst Places Them in a Context.After