Of the following statements about financial ratios, which is NOT true?
A) Financial ratios are designed to assess different aspects of the firm's financial situation.
B) Financial ratios enable meaningful comparisons among companies of different sizes to assess which companies are performing better and which are performing worse.
C) The Debt Ratio = Total Liabilities/Current Assets
D) A rule of thumb is that companies should have a current ratio between 1 and 2.
E) The current ratio is often important in debt covenants.
Correct Answer:
Verified
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