Ratios are useful in explaining the
A)relationships between financial data.
B)differences between companies.
C)trends within industries.
D)reasons for financial performance.

Question

Quizplus · Accepted Answer

Ratios are used to describe the relationship between different financial data points, such as comparing a company's current assets to its current liabilities. By understanding these relationships, analysts can draw meaningful conclusions about a company's financial health and potential risks. Ratios are not as useful for comparing different companies or explaining reasons for financial performance. They can, however, be helpful in identifying trends within an industry.

Ratios Are Useful in Explaining the