Which of the following statements about operating ratios (which can be calculated from operating statements) is TRUE?
A) By comparing operating ratios from one period to another, a firm can identify areas that may need special attention.
B) These ratios are often used for control purposes.
C) These ratios are calculated by dividing operating statement items by net sales.
D) By comparing its operating ratios with competitors' ratios, a firm may be able to obtain a better idea of how it is doing.
E) All of the above are true.

Question

Quizplus · Accepted Answer

All of the statements about operating ratios are true. Operating ratios help a firm identify areas that may need special attention and are often used for control purposes. They are calculated by dividing operating statement items by net sales. Comparing a firm's operating ratios with its competitors can help it obtain a better idea of how it is doing in terms of efficiency and profitability.

Which of the Following Statements About Operating Ratios (Which Can