A ratio calculated in the analysis of financial statements
A) expresses a mathematical relationship between two numbers.
B) shows the percentage increase from one year to another.
C) restates all items on a financial statement in terms of dollars of the same purchasing power.
D) is meaningful only if the numerator is greater than the denominator.

Question

Quizplus · Accepted Answer

A ratio compares two numbers and expresses a mathematical relationship between them, such as the relationship between a company's current assets and current liabilities. It is not necessarily dependent on the size of the numerator or denominator, as long as the relationship between them is meaningful.

A Ratio Calculated in the Analysis of Financial Statements