Multiple Choice
Along with calculating financial ratios, what else is essential to include in your report to provide meaningful analysis?
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14. Financial Statement Analysis
Introduction to Ratios
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All of the following are standards used in financial statement analysis for comparisons EXCEPT:
A
Competitor benchmarks
B
Personal opinions of management
C
Industry averages
D
Past performance of the company
Verified step by step guidance1
Understand the concept of financial statement analysis: It involves evaluating a company's financial data to assess its performance, financial health, and trends over time.
Identify the common standards used in financial statement analysis: These include competitor benchmarks, industry averages, and past performance of the company. These standards provide objective and comparable metrics for analysis.
Recognize that personal opinions of management are not considered a standard for financial statement analysis: This is because they are subjective and lack the objectivity required for reliable comparisons.
Compare the listed options to the standards used in financial statement analysis: Competitor benchmarks, industry averages, and past performance are all valid standards, while personal opinions of management are not.
Conclude that the correct answer is 'Personal opinions of management,' as it does not align with the objective and standardized methods used in financial statement analysis.
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