Although ratios can provide valuable information, they can also be misleading for the following reason(s):
A)ratios are only as reliable as the accounting data on which they are based.
B)compilation of industry norms often do not report information about the distribution of values.
C)comparative analysis depends on the availability of data for appropriately defined industries.
D)all of these are correct.

Question

Quizplus · Accepted Answer

All of the given reasons are correct. Ratios can be misleading if the accounting data on which they are based is not reliable, if industry norms do not provide information about the distribution of values, or if comparative analysis depends on the availability of data for appropriately defined industries. Therefore, it is important to use ratios with caution and consider other factors when analyzing financial information.

Although Ratios Can Provide Valuable Information, They Can Also Be