When are ratios most useful for analysis?
A) When used alone.
B) When compared with historical ratios of the same company.
C) When compared with ratios for other companies in the industry.
D) When compared with both historical ratios of the same company and ratios for other companies in the industry.

Question

Quizplus · Accepted Answer

Ratios are most useful for analysis when they are compared both with historical ratios of the same company, to track performance over time, and with ratios for other companies in the industry, to gauge competitive position and industry standards. This comprehensive approach provides a more complete picture of a company's financial health and performance.

When Are Ratios Most Useful for Analysis