A ratio analysis of financial statements indicates:
A) the investment opportunities available to an organization.
B) the ability of an organization to meet short-term obligations.
C) the competitiveness of an organization.
D) the marketability of the finished product of an organization.

Question

A ratio analysis of financial statements indicates:
A) the investment opportunities available to an organization.​
B) the ability of an organization to meet short-term obligations.
C) the competitiveness of an organization.
D) the marketability of the finished product of an organization.

Quizplus · Accepted Answer

Ratio analysis is a tool used to measure the financial performance of an organization. It provides information about the organization's ability to meet its short-term obligations such as debts, interest payments, and bills. As such, option B is the most appropriate answer. Option A is incorrect because investment opportunities are typically assessed through other methods. Option C is incorrect because competitiveness cannot be directly determined by ratio analysis. Option D is incorrect as the marketability of the finished product involves various factors other than the financial health of an organization.

A Ratio Analysis of Financial Statements Indicates