Which of the following limitation in using ratio analysis best describes the following statement: “In 20X3, the firm acquired a new line of business which has a very different revenue and cost structure. This makes it difficult to compare the firm’s profitability margins from 20X1 to 20X3.”? Question 5 options: 1) The company operates in many different businesses. 2) The accounting practices adopted by the firm. 3) Possible window dressing practices. 4) The effects of inflation.
Which of the following limitation in using ratio analysis best describes the following statement: “In 20X3, the firm acquired a new line of business which has a very different revenue and cost structure. This makes it difficult to compare the firm’s profitability margins from 20X1 to 20X3.”? Question 5 options: 1) The company operates in many different businesses. 2) The accounting practices adopted by the firm. 3) Possible window dressing practices. 4) The effects of inflation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following limitation in using ratio analysis best describes the following statement: “In 20X3, the firm acquired a new line of business which has a very different revenue and cost structure. This makes it difficult to compare the firm’s profitability margins from 20X1 to 20X3.”?
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