Asked by LeeAnn Tiffany on May 21, 2024
Verified
Which one of the following factors makes it difficult for financial analysts to use trend analysis?
A) Decreasing costs and prices.
B) Deflation.
C) An aging asset base.
D) A relatively new asset base.
Trend Analysis
The process of comparing business data over time to identify any consistent results or trends.
Aging Asset Base
Refers to a company's fixed assets becoming older and potentially less efficient or valuable over time.
- Comprehend the factors that affect the comparison of rate-of-return across companies due to GAAP for long-lived assets.
Verified Answer
MH
Madison HendrixMay 27, 2024
Final Answer :
C
Explanation :
An aging asset base makes it difficult for financial analysts to use trend analysis because it can distort depreciation expenses and asset valuations, leading to misleading trends or comparisons over time.
Learning Objectives
- Comprehend the factors that affect the comparison of rate-of-return across companies due to GAAP for long-lived assets.
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