Which one of the following is TRUE?
A) Stand-alone ratios do not provide much information about the company.
B) Ratios are comparative measures over time or across firms.
C) Ratios are forward-looking measures.
D) Analyzing historical ratios is not useful.

Question

Quizplus · Accepted Answer

Ratios are used to compare one aspect of a company to another, either over time or across different firms. Comparing ratios provides important insights into a company's financial health and performance. Stand-alone ratios can be useful but are limited in their ability to provide a comprehensive view of a company's performance. Ratios can also be used to make projections or forecasts about a company's future performance, but they are not inherently forward-looking measures. Analyzing historical ratios can be very useful for understanding trends and identifying areas of strength and weakness in a company's financial statements.

Which One of the Following Is TRUE