Which of the following statements is TRUE regarding the results of financial statement analysis?
A)They can be found in the management discussion and analysis section of the financial statements.
B)They are most meaningful when compared to competitors in diverse industries.
C)They identify whether or not fraud has taken place.
D)They have limited value without a point of reference.

Question

Quizplus · Accepted Answer

Financial statement analysis provides information about the financial health of a company, but often it is difficult to interpret the results without a frame of reference. This means that analysis of trends and ratios over time or in comparison to industry averages or competitors is necessary to draw meaningful conclusions.

Which of the Following Statements Is TRUE Regarding the Results