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Which of the followingreduce the usefulnessof ratio analysis when comparing entities that operate in the same industry? Select ALL that apply.
Suggested Answer: B
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34 comments · newest first
EL
Ellen
11 months ago
E is true, but isn't that just how it is?
LU
Luke
11 months ago
Surprised that D is even a factor!
RO
Rory
11 months ago
C is not really a problem, right?
SU
Sue
12 months ago
I think B is a big issue too.
KE
Kenny
12 months ago
A definitely affects comparability.
WE
Weldon
1 year ago
I thought ratios being based on historical information could limit their usefulness, but I’m not entirely sure if E applies here. It feels like it could be a factor.
CA
Carmen
1 year ago
I practiced a question similar to this, and I feel like the revaluation of non-current assets could impact the ratios significantly. So, I would lean towards D being a correct answer.
HE
Helga
1 year ago
I'm a bit unsure, but I think the revenue aggregation from different activities could also complicate comparisons. Maybe A is relevant too?
LA
Lacey
1 year ago
I remember discussing how different accounting estimates, like depreciation, can really skew the ratios between companies. So, I think B is definitely a factor.
CA
Carman
1 year ago
Revaluing non-current assets is another factor that could impact the usefulness of ratio analysis. I'll make sure to include that in my answer.
DO
Donte
1 year ago
The effect of a material and unusual item being disclosed separately is a good point. That could definitely skew the ratios and make comparisons less meaningful.
MA
Marnie
1 year ago
Accounting estimates like depreciation being different between entities is definitely something that could reduce the comparability of ratios. I'll make sure to select that one.
JU
Julene
1 year ago
The revenue figure being aggregated from many different activities and sources is an interesting one. I'll need to think about how that could impact the usefulness of ratio analysis.
LA
Latanya
1 year ago
This question seems straightforward, but I'll need to carefully consider each option to ensure I select the right ones.
KA
Karan
1 year ago
I feel pretty confident that the answer is C. Setting the includeAttachment parameter to true seems like the most straightforward way to include the product images in the response.
MO
Mona
1 year ago
Ugh, I'm not totally confident on this one. Power supply form factors are a bit tricky to keep track of. I'll have to make an educated guess here.
CA
Catina
1 year ago
I'm not too sure, but I remember something about briefing as needed... maybe option C? It sounds familiar from our practice questions.
LE
Lenny
2 years ago
Ha! I bet the answer is F - ratios may be quick and easy, but that's what makes them so misleading when comparing companies. Gotta dig deeper!
KI
Kimbery
1 year ago
E) Ratio calculations being based on historical information.
EU
Eura
1 year ago
C) The effect of a material and unusual item being disclosed separately in the notes.
HE
Helga
1 year ago
B) Accounting estimates in respect of depreciation being different between entities.
BR
Brice
1 year ago
A) The revenue figure being aggregated from many different activities and sources.
BR
Brittni
2 years ago
Hmm, I'm not sure about E - historical info is what ratio analysis is based on, so I don't think that's a valid answer.
VE
Veronica
1 year ago
I agree, historical information is essential for ratio analysis to compare entities accurately.
VE
Veronica
1 year ago
I think E is actually a valid answer because ratio calculations are based on historical information.
BE
Beckie
2 years ago
But what about option D? Revaluing assets can also impact ratio analysis, right?
TR
Tresa
2 years ago
I agree with Detra, different depreciation estimates can make comparisons difficult.
CA
Casie
2 years ago
I agree, and I'd add that D also reduces comparability since different asset valuation policies skew the ratios.
AL
Alesia
1 year ago
I agree, and I'd add that D also reduces comparability since different asset valuation policies skew the ratios.
BR
Britt
1 year ago
E) Ratio calculations being based on historical information.
KA
Katy
1 year ago
B) Accounting estimates in respect of depreciation being different between entities.
NE
Nell
2 years ago
A) The revenue figure being aggregated from many different activities and sources.
MY
My
2 years ago
A and B definitely reduce the usefulness of ratio analysis. Accounting differences between companies make it hard to compare apples to apples.
DE
Detra
2 years ago
I think option B reduces the usefulness of ratio analysis.