Which one of the following statements is correct concerning ratio analysis?
A) A single ratio is often computed differently by different individuals.
B) Ratios do NOT address the problem of size differences among firms.
C) There is only a very limited number of ratios which can be used for analytical purposes.
D) Each ratio has a specific formula that is used consistently by all analysts.
E) Ratios can NOT be used for comparison purposes over periods of time.

Question

Quizplus · Accepted Answer

A single ratio can indeed be computed differently by different individuals due to variations in interpretation of what constitutes certain financial statement items, leading to inconsistencies in ratio calculations.

Which One of the Following Statements Is Correct Concerning Ratio