Explain the limitations of ratio analysis

Q: What is an acceptable current ratio?

A: Definition: Ratio analysis: It is the financial analysis tool for measuring the profitability,…

Q: Describe how the FIFO method is different from the weighted-average method.

A: FIFO and weighted average method are the accounting tool for the inventory valuation. Under FIFO,…

Q: What limitations do ratio analysis have?

A: Ratio Analysis: It is a technique used in the financial analysis field. Ratio analysis helps to use…

Q: Discuss any two limitations of  Ratio analysis.

A: Limitations of ratio analysis:Ratios are mostly computed based on historical costs as a result;…

Q: advantages and disadvantages of using ratios

A: Accounting ratios are important metrics used to evaluate the financial position of a business…

Q: What is the difference between margin and markup?

A: Margin and Markup are two terms used for calculation of selling price of the product. Margin is also…

Q: Explain any  TWO (2) advantages of ratio analysis

A: Analyzing the figures that are recorded in the financial statement in such a manner that helps to…

Q: List and briefly explain the  quantitative and qualitative  factors consider for ratio  analysis

A: Ratio analysis is a quantitative method of observing a company's liquidity, operational efficiency,…

Q: What are the advantages and limitations of ratio analysis? Identify three advantage and three…

A: Ratio Analysis is the use of accounting ratios to forecast or review the financial performance of a…

Q: The limitations of ratio analysis as a tool for strategic decision making

A: It is frequently required to compare the performance of a company or multiple organisations across…

Q: List several potential difficulties with ratio analysis.

A: Ratio analysis is a correlation of details in an organization's financial reports. It is utilized to…

Q: Define comparative ratio analysis

A: Answer: Comparative analysis of the ratio is a method used by companies to judge the financial…

Q: "Ratio analysis reveals hidden facts" - Comment on this statement highlighting the merits and…

A: SOLUTION RATIO ANALYSIS IS THE QUANTITATIVE ANALYSIS OF DATA ENCLOSED IN AN ENTERPRISE'S FINANCIAL…

Q: Explain the term differential analysis.

A: The term differential analysis is explained as follows:

Q: Discuss the advantages and limitations of Ratio Analysis.

A: Ratio analysis is the process of determining and interpreting numerical relationships based on…

Q: Internal rate of return approach does not address the issues of scale! Discuss?

A: Capital budgeting is a method used for finding the profitability of investment proposals. These…

Q: What does the lower-of-cost-or-market (LCM) rule require?

A: Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting…

Q: Define efficiency ratios

A: Efficiency Ratios : These ratios are employed to evaluate the efficiency with which the firm manages…

Q: List several potential problems with ratio analysis.

A: Ratio analysis is a correlation of details in an organization's financial reports. It is utilized to…

Q: Define the Sortino ratio and explain its advantage

A: Ratio analysis is referred to as the quantitative method for gaining an insight with relate to the…

Q: Explain how the segment margin differs from the contribution margin.

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Is a negative Sharpe ratio good or bad?  EXPLAIN

A: What sharpe ratio measure? It measure the excess return earn by portfolio over risk free rate at…

Q: Please I want answer for this according to your understanding and experience. Thanks

A: Ratio analysis: The analysis of a company using the financial ratios and comparing its trends and…

Q: List three types of users of ratio analysis. Would the different users emphasize thesame or…

A: Introduction: A ratio is a simple arithmetical expression of the relationship of one number to…

Q: Define GAP Analysis

A: Gap Analysis is done by the company to fill the gaps and improve the performance of the company.…

Q: What would the effect of the failure in the ratio measurement?

A: Ratio measurement in terms of financial world depicts that a single accounting figure by itself may…

Q: The simplifying assumption that costs and volume vary in straight-line relationships makes the…

A: Cost Volume Profit Analysis is a method of costing that has an impact on the varying levels of cost…

Q: Operation Margin, Current Ration, Mark-up Ratio Explain the meaning and the purpose of each ratio.…

A: Rations are calculated for data interpretation in short and quick way. This able comparison of…

Q: main limitations of ratio analysis

A: Ratio analysis is the way to assess the financial status of an entity based on certain accounting…

Q: Define solvency ratios.

A: Solvency: Solvency is the capability of a company to pay the long-term liabilities which are due.…

Q: Explain two (2) disadvantages associated with the use ratio analysis.

A: Introduction Ratio Analysis is the management accounting tool used to ascertain liquidity, solvency,…

Q: Distinguish between Contribution Margin and Break-Even Volume?

A: Contribution margin:   This is the price of a product less all the associated variable cost that…

Q: 1. Describe the difference benchmarks that can be used for ratio analysis.

A: Ratio analysis: It is the method of evaluation of the current financial condition of the company…

Q: Which of the following statements is true? Select one: one: a. The most complex of the cost…

A: High-low method: It is the method of estimating the variable cost per unit and the fixed costs by…

Q: Explain differential analysis

A: Differential Analysis involves understanding the purpose of different costs that may arise from…

Q: Define a nonlinear cost function.

A: Cost Function: Cost function represents the basic change that comes in the total cost due to the…