Asked by Christian Mirakaj on May 04, 2024
Verified
Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are
A) a substitute for sound judgment
B) useful analytical measures
C) enough information for analysis; industry information is not needed
D) unnecessary for analysis if industry information is available
Percentage Analyses
Involves calculating each component of a financial statement as a percentage of a total figure to analyze the company's performance and financial health in comparison to other periods or companies.
Analytical Measures
Techniques and calculations used to assess the performance and financial health of a business.
- Understand the critical roles of solvency, liquidity, leverage, and profitability in determining a company's financial stability.
- Comprehend the different financial ratios and their functions in evaluating the performance and solvency of a company.
Verified Answer
RR
Ricardo RodriguezMay 11, 2024
Final Answer :
B
Explanation :
Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are useful analytical measures that can help in evaluating the financial health of a company. However, they should not be used as a substitute for sound judgment. Additionally, industry information is also important to consider for a comprehensive analysis of a company's financial performance.
Learning Objectives
- Understand the critical roles of solvency, liquidity, leverage, and profitability in determining a company's financial stability.
- Comprehend the different financial ratios and their functions in evaluating the performance and solvency of a company.
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