Which of the following statements is incorrect? Question 6 options: Many large firms operate different divisions in different industries, and this makes it hard to develop a meaningful set of industry benchmarks for these types of firms. Financial ratios should be interpreted with caution because it may be difficult to say with certainty what is a "good" value. For example, in the case of the current ratio, a "good" value is neither high nor low. Financial ratios should be interpreted with caution because higher value of profitability ratios imply greater efficiency in asset management. Ratio analysis facilitates comparisons by standardizing numbers. Financial ratios should be interpreted with caution because there exist seasonal and accounting differences that can reduce their comparability.

Which of the following statements is incorrect? Question 6 options: Many large firms operate different divisions in different industries, and this makes it hard to develop a meaningful set of industry benchmarks for these types of firms. Financial ratios should be interpreted with caution because it may be difficult to say with certainty what is a "good" value. For example, in the case of the current ratio, a "good" value is neither high nor low. Financial ratios should be interpreted with caution because higher value of profitability ratios imply greater efficiency in asset management. Ratio analysis facilitates comparisons by standardizing numbers. Financial ratios should be interpreted with caution because there exist seasonal and accounting differences that can reduce their comparability.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 5P

See similar textbooks

Similar questions

Which is not a potential problem of utilizing ratio analysis? A. trends and industry averages are historical in nature. B. financial data may be distorted due to price-level changes. C. firms within an industry may not use similar accounting methods. D. all of the above E. answer not given
Q8) The following ratio analysis limitation is best described: Many large firms operate in different industries, and it is difficult to find a meaningful set of industry-average ratios. Group of answer choices a) Many different divisions. b) Inflation. c) Different accounting practices. d) Window dressing.
Answer the following question in essay. What do you understand by current ratio? What are it uses? What are its limitations? Ratio analysis is widely used as a tool of financial analysis, yet it suffers from various limitations. Explain. How can solvency of a firm be measured? What you understand by Liquidity ratios? Discuss their significance. Page 1 Module PSFM08 MANAGERIAL ACOUNTING WITH FINANCIAL ANALYSIS AND REPORTING Explain the importance of profitability ratio. How they are worked out?
Which of the following statements is incorrect? Select one: A. It is possible for markets to be efficient with respect to some information and inefficient with respect to other information B. It is possible for some markets to be more efficient than others C. The market is likely to be more efficient with respect to companies where there is greater analyst following D. The market is totally efficient with respect to companies providing regular dividends to investors
Please see the attached graph for questions below. What is the difference between the two companies on this ratio? What is a plausible explanation as to why they would differ? Is one company clearly different than the other? Are there economic or end-market influences that explain why the ratios differ? What might they be? Over time, is each company’s overall financial performance improving, declining, or is something strange going on? Do you think evaluating financial statements is a good idea? What do you regard as some of the shortcomings of financial ratio analysis?
Each of the following is true of successful financial ratio analysis EXCEPT ____. a. ratios must be used in conjunction with other data to obtain meaningful information b. ratios are meaningful only when compared to a standard c. some industries use special ratios that are unique to the activities of firms in those industries d. a single ratio is all that is needed to indicate specific areas of weakness that must be addressed
Which of the following best describes the following financial ratio analysis limitation: firms operate in different industries and is difficult to find a meaningful set of industry-average ratios.Question 14 options: 1) Window dressing 2) Many different divisions 3) Inflation 4) None of the above options
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 these can reduce the effectiveness of ratio analysis.
Which of the following statements regarding financial ratios is most CORRECT? Group of answer choices: Industry average ratios are good benchmarks to compare performance for all firms in the same industry. Ratios are by themselves good indicators of a firm's strong or weak position. Electric utilities generally have low debt ratios because of their more stable revenue streams. Ratio analysis works better for conglomerate frms than for single-business firms. None of these statements are correct.
Market-based bonus schemes may be considered more appropriate from a PAT perspective in industries in which: successful strategies will not be reflected in accounting profits for a number of periods. the price/earnings ratio is commonly greater than 12. profits may be the subject of manipulation by managers. capital investment is not an important strategic decision.
20. Which of the following factor does not affect a company's financial ratios? Select one: a. Aggressive revenue recognition practices. b. Accounting for similar economic fundamentals in a similar fashion c. The timing of asset purchases. d. The presence of nonrecurring items among the firms being analysed.
In comparing the current ratios of two companies, why is it invalid to assume that the company with the higher current ratio is the better company? a. The two companies may be different sizes. b. A high current ratio may indicate inadequate inventory on hand. c. The two companies may define working capital in different terms. d. A high current ratio may indicate inefficient use of various assets and liabilities. could you explain this question

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS

GET THE APP

About FAQ Academic Integrity Sitemap Document Sitemap

Contact Bartleby Contact Research (Essays)High School Textbooks Literature Guides Concept Explainers by Subject Essay Help Mobile App

GET THE APP

Privacy

Your CA Privacy Rights

Your NV Privacy Rights

About Ads

Manage My Data

bartleby, a Learneo, Inc. business

	Many large firms operate different divisions in different industries, and this makes it hard to develop a meaningful set of industry benchmarks for these types of firms.
	Financial ratios should be interpreted with caution because it may be difficult to say with certainty what is a "good" value. For example, in the case of the current ratio, a "good" value is neither high nor low.
	Financial ratios should be interpreted with caution because higher value of profitability ratios imply greater efficiency in asset management.
	Ratio analysis facilitates comparisons by standardizing numbers.
	Financial ratios should be interpreted with caution because there exist seasonal and accounting differences that can reduce their comparability.