Financial ratios
I. allow comparisons across firms without concern over firm size.
II. can compare a firm's operating and financial status to industry norms.
III. provide insights into a companies future.
IV. look at the liquidity, activity, leverage, profitability and market measures of a firm.
A) II and IV only
B) I and II only
C) I, II and IV only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

Financial ratios are tools that help in comparing firms irrespective of their size, comparing a firm's status to industry norms, predicting future performance, and analyzing various aspects of a firm's operations such as liquidity, activity, leverage, profitability, and market measures.

Financial Ratios I. Allow Comparisons Across Firms Without Concern Over Firm Size