Key numbers that financial managers use to calculate ratios usually come from the firm's:
A) prospectus and operating budget.
B) statement of cash flows.
C) balance sheet and income statement.
D) cost budget statements.

Question

Quizplus · Accepted Answer

Financial managers use key numbers from the balance sheet and income statement to calculate ratios such as the liquidity ratio, profitability ratio, and debt ratio. The prospectus and operating budget do not provide the historical financial information needed for ratio analysis. The statement of cash flows provides information about the firm's cash flows but not the specific financial data required for ratio analysis. Cost budget statements provide information on the firm's costs but do not provide the information required for ratio analysis.

Key Numbers That Financial Managers Use to Calculate Ratios Usually