Which of the following may reduce the effectiveness of ratio analysis?
A) Highly diversified companies may have activities that obscure trends that may appear more clearly in single function companies.
B) Management may use window dressing at the end of the year to improve apparent performance.
C) Companies in the same industry may use different accounting practices which may indicate differing levels of performance that don't really exist.
D) Book values may not be comparable from company to company because of the age of the asset, inflation, etc.
E) All of the above can reduce the effectiveness of ratio analysis.
Correct Answer:
Verified
Q6: The difference between current assets and liabilities
Q8: _ indicate the ability of the firm
Q23: _ include average collection period and inventory
Q23: The ratio group most likely to be
Q37: _ show how effectively the firm uses
Q37: The _ ratio is unusual in that,
Q40: The fixed asset turnover ratio is influenced
Q42: The _ ratio, sometimes called the "acid
Q45: Common size statements can be most effective
Q46: Christy would like to improve the current
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents