Ratios are used as tools in financial analysis
A) instead of horizontal and vertical analyses.
B) because they may provide information that is not apparent from inspection of the individual components of the ratio.
C) because even single ratios by themselves are quite meaningful.
D) because they are prescribed by GAAP.

Question

Quizplus · Accepted Answer

Ratios provide information that is not apparent from inspection of the individual components of the ratio. They allow for comparisons across different periods and among companies of different sizes and in different industries. Additionally, ratios can provide insight into a company's liquidity, profitability, debt level, and operating efficiency.

Ratios Are Used as Tools in Financial Analysis