Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up againstitself over time and against other players within the industry.However, like many tools and techniques, ratio analysis has a few limitations and weaknesses.Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply.Different firms may use different accounting practices.A firm may operate in multiple industries.A firm's financial statements show only one period of financial data.

Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply. Different firms may use different accounting practices. A firm may operate in multiple industries. A firm's financial statements show only one period of financial data.

Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply. Different firms may use different accounting practices. A firm may operate in multiple industries. A firm's financial statements show only one period of financial data.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 5P

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Question

Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against
itself over time and against other players within the industry.
However, like many tools and techniques, ratio analysis has a few limitations and weaknesses.
Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply.
Different firms may use different accounting practices.
A firm may operate in multiple industries.
A firm's financial statements show only one period of financial data.

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