"The amount of information in the accounting reports is so overwhelming that I cannot understand it," said Ripley to his division manager, Sotol. "Yes," said Sotol, "The sheer volume of the numbers in the reports is daunting. That's why we have decided that an effective approach for checking our firm's overall performance is to use ________, which indicate strengths and weaknesses."
A)profit and loss statements
B)key financial ratios
C)assets
D)liabilities
E)balance sheets

Question

Quizplus · Accepted Answer

Key financial ratios are a way to distill the overwhelming amount of information in accounting reports into easily understandable and comparable numbers that indicate a company's strengths and weaknesses. Profit and loss statements, assets, liabilities, and balance sheets are all components of accounting reports and do not provide the same level of simplified analysis as financial ratios.

"The Amount of Information in the Accounting Reports Is So