Introduction to Ratios Video Lessons

Video Thumbnail

Concept

Problem: Why is ratio analysis useful? a. It’s not useful; nobody in the real world ever uses this stuff. b. It provides an easy, objective way of telling whether a company is, on balance, in a strong or weak position. c. It is a way of standardizing numbers and can facilitate comparisons between firms. d. Unlike “raw” accounting data, ratios cannot be distorted by inflation. e. It eliminates the need to consider “qualitative” factors when evaluating a firm’s financial condition.

FREE Expert Solution
Problem Details

Why is ratio analysis useful?

a. It’s not useful; nobody in the real world ever uses this stuff.

b. It provides an easy, objective way of telling whether a company is, on balance, in a strong or weak position.

c. It is a way of standardizing numbers and can facilitate comparisons between firms.

d. Unlike “raw” accounting data, ratios cannot be distorted by inflation.

e. It eliminates the need to consider “qualitative” factors when evaluating a firm’s financial condition.

Frequently Asked Questions

What scientific concept do you need to know in order to solve this problem?

Our tutors have indicated that to solve this problem you will need to apply the Introduction to Ratios concept. You can view video lessons to learn Introduction to Ratios. Or if you need more Introduction to Ratios practice, you can also practice Introduction to Ratios practice problems.

What is the difficulty of this problem?

Our tutors rated the difficulty ofWhy is ratio analysis useful? a. It’s not useful; nobody in...as medium difficulty.