The use of the unaudited financial statements for ratio analysis is preferable because it reflects the firms true financial condition.

FINANCIAL MANAGEMENT

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The use of the unaudited financial statements for ratio analysis is preferable because it reflects the firm’s true financial condition.

A	True
B	False

Explanation:

Detailed explanation-1: -Ans:-True. Reason: Based on analysis of financial statement one can get idea of financial strength and weakness of the business. However, based on this one cannot take decision about the business on various issues.

Detailed explanation-2: -Ratio analysis compares line-item data from a company’s financial statements to reveal insights regarding profitability, liquidity, operational efficiency, and solvency. Ratio analysis can mark how a company is performing over time, while comparing a company to another within the same industry or sector.

Detailed explanation-3: -1. Ensuring uniformity: There will be a uniform comparison amongst the ratio that is calculated at the same point in time. 2. True value: If the time of determining the ratio varies, there are chances that the results will be wrong or inaccurate.

Detailed explanation-4: -Answer and Explanation: The answer is D. Ratios help analyze the performance of a company and compare its performance with other firms within that industry.

There is 1 question to complete.

BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL MANAGEMENT