Asked by Karan Patel on Apr 25, 2024
Verified
Financial ratio,percentage,and trend comparisons can be distorted by all of the following except
A) the presence of nonrecurring items among the firms being analyzed.
B) aggressive revenue recognition practices.
C) the timing of asset purchases.
D) accounting for similar economic fundamentals in similar fashion.
Financial Ratio
A numerical comparison derived from a company's financial statements, used to evaluate aspects of its operational efficiency, liquidity, profitability, and solvency.
Nonrecurring Items
Expenses or incomes that appear infrequently or irregularly on the financial statements, not expected to recur in the foreseeable future.
Revenue Recognition
An accounting process detailing how and when revenue is earned and reported, influencing financial statements.
- Recognize the potential for financial ratios to be distorted by accounting choices and practices, and identify methods for adjusting analysis accordingly.
Verified Answer
Learning Objectives
- Recognize the potential for financial ratios to be distorted by accounting choices and practices, and identify methods for adjusting analysis accordingly.
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