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Factors which can cause accounting ratios to be misleading when used for comparison?
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∙ 10y ago
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What are the benefits in using ratios for accounting?
what are the beniftes in using ratios in accounting
What are the ratios that name the same comparison?
equivalent ratios are different ratios that name the same comparison
Explain the reasons for using ratios as a means of explaining accounting information?
Ratios are used in accounting to provide a comparative analysis of financial data. They allow for easy interpretation and comparison of numbers across different time periods or between companies. Ratios also help identify trends, assess financial health, and identify areas of strength or weakness within a company. Overall, ratios provide a simplified way of conveying complex financial information.
Is a ratio a comparison between two ratios?
A ratio is a comparison between two values. The values can be integers or fractions (ratios).
What two ratios measure factors that affect profitability?
what tw ratios measure factors
What is a comparison of two quantities with different units?
ratios
How are ratios and scale factors different?
Ratios show the information of the side lengths scale factors show the information of how they are related
What ia an comparison of numbers or variables that can be written in fraction form?
They are ratios.
What is a comparison of numbers or variables that can be written as a fraction form?
They are known as ratios.
What are ratios equal to 53?
Ratios are about comparison, one number to another. You can't have a ratio from only one number, as there isn't anything to compare it to.
What are the potential problems and limitations of financial ratio analysis?
'''''Limitations of financial ratio analysis''''' # Many ratios are calculated on the basis of the balance-sheet figures. These figures are as on the balance-sheet date only and may not be indicative of the year-round position. # Comparing the ratios with past trends and with competitors may not give a correct picture as the figures may not be easily comparable due to the difference in accounting policies, accounting period etc. # It gives current and past trends, but not future trends. # Impact of inflation is not properly reflected, as many figures are taken at historical numbers, several years old. # There are differences in approach among financial analysts on how to treat certain items, how to interpret ratios etc. # The ratios are only as good or bad as the underlying information used to calculate them. Although ratio analysis is very important tool to judge the company's performance , following are the limitations of it. 1. Ratios are tools of quantitativeanalysis, which ignore qualitative points of view. 2. Ratios are generally distorted by inflation. 3. Ratios give false result, if they are calculated from incorrect accounting data. 4. Ratios are calculated on the basis of past data. Therefore, they do not provide complete information for future forecasting. 5. Ratios may be misleading, if they are based on false or window-dressed accounting information
What has the author Leonard James Blythe written?
Leonard James Blythe has written: 'Accounting ratios'
