Which one of the following statements is correct concerning ratio analysis?
A)Ratios cannot be used for comparison purposes over extended periods of time.
B)Ratios do not address the problem of size differences among firms.
C)Only a very limited number of ratios can be used for analytical purposes.
D)Each ratio has a specific formula that is used consistently by all analysts.
E)A single ratio is often computed differently by different individuals.

Question

Quizplus · Accepted Answer

Different individuals may use different accounting methods or interpretations of financial data, resulting in different calculations of the same ratio. It is important to ensure consistency in calculation and interpretation when using ratios for financial analysis.

Which One of the Following Statements Is Correct Concerning Ratio