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Which of the following is NOT correct about the financial ratios?
Select one:
a. Financial ratios are based on the estimated values of balance sheet and income statement accounts.
b. Financial ratios can be viewed as equalizers, allowing for relative comparisons to be made.
c. Financial ratios are one of an analyst’s most powerful tools, converting financial statement information into a form that is easier to analyze.
d. The examination of financial ratios provides insights into how a firm has performed historically and how it is performing relative to its competitors and its industry.
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- Financial ratio analysis is conducted by managers, equity investors, long-term creditors, and short-term creditors. What is the primary emphasis of each of these groups in evaluating ratios?Critically Discuss the two statements below. A. Ratio is an expression of relationship between two or more items in mathematical terms. Ratio may be expressed as a:b (a is to b), in terms of simple fraction, integer, or percentage. B. A Finance Manager can utilize financial ratios and completely analyse any firm's financial performance without the need for any further financial review via any other company's data.Ratio is an expression of relationship between two or more items in mathematical terms. Ratio may be expressed as a:b (a is to b), in terms of simple fraction, integer, or percentage. Critically discuss. A Finance Manager can utilize financial ratios and completely analyze any firm's financial performance without the need for any further financial review via any other company's data. Critically discuss.
- What is the basic purpose for examining trends in a company’s financial ratios and other data? What other kinds of comparisons might an analyst make?What is the purpose of looking at financial ratios and other data as a financial analyst? What other ways can you do data analysis?Which statement best describes a financial ratio and financial ratio analysis? A financial ratio simply represents a relationship between 2 or more pieces of financial information; there is one absolute, standard list of ratios that applies to all financial analysis A financial ratio simply represents a relationship between 2 or more pieces of financial information; there is NOT one absolute, standard list of ratios that applies to all financial analysis A financial ratio simply represents a market estimate of a certain aspect of a firm's financial position and the industry's benchmark; there is one absolute, standard list of ratios that applies to all financial analysis A financial ratio simply represents a market estimate of a certain aspect of a firm's financial position and the industry's benchmark; there is NOT one absolute, standard list of ratios that applies to all financial analysis
- Ratio Analysis is the process of identifying the financial strengths and weaknesses of the enterprise by logically establishing relationship between the items of Balance Sheet or Income Statement or both and interpreting the results there of in order to derive meaningful conclusions. In view of the requirement of various users (e.g., Short-term Creditors, Long-term Creditors, Management & Investors) of the ratios, one may classify ratios into the following four groups: a) Liquidity Ratios b) Solvency Ratios c) Activity Ratios d) Profitability Ratios You are required to pick any two from the aforementioned groups and discuss the various ratios calculated under these along with the purpose or objective of calculation of the individual ratios you are alluding to.1. What are some of the tests of a sound or healthy long-term financial position? 2. Give some indications of managerial efficiency in the use of company resources. 3. What are the most commonly used techniques in the analysis and interpretation of financial statements? 4. What are the steps involved in using trend percentages in financial analysis? 5. Distinguish between horizontal and vertical analysis of financial statement data 6. What is the basic objective in looking at trends in financial ratios and other data? 7. Define trendpercentages 8. Discuss the steps in analyzing financial statements using trend percentages. 9. In financial statement analysis, what is the basic objective of observing trends in data and ratios? Suggest some other standards of comparison. 10. Distinguish between trend percentages and component percentages. 11. Which would be better suited for analyzing the change in sales over a term of several years? 12. Nets sales of the Premiere General Store have been…The return on total assets is the focus of analysts, creditors, and other users of financial statements. 1. How is the return on total assets computed? 2. What does this important ratio reflect? 3. Return on total assets can be separated into two important components. Write the formula to separate the return on total assets into its two basic components. 4. Explain how these components of the return on total assets are helpful to financial statement users for business decisions.
- Describe and justify why you would use the following ratios as an analyst to evaluate the performance of a company. Profitability Ratios Liquidity Ratios Gearing Ratios Investment Ratios1. Among the financial ratios learned, what is the best ratio in understanding and monitoring the entity’s financial performance accurately? Explain your claim with specific example.Which of the following are techniques, tools or methods of analysis and interpretation of financial statements? Select one: a. Comparative Analysis b. All of the above c. Trend Analysis d. Ratio Analysis