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CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 86 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 86
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

Which of the followingreduce the usefulnessof ratio analysis when comparing entities that operate in the same industry? Select ALL that apply.

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Suggested Answer: B

by Julie at May 01, 2024, 11:48 PM

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Lenny
2 months 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!
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Kimbery
10 days ago
E) Ratio calculations being based on historical information.
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Eura
23 days ago
C) The effect of a material and unusual item being disclosed separately in the notes.
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Helga
29 days ago
B) Accounting estimates in respect of depreciation being different between entities.
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Brice
1 months ago
A) The revenue figure being aggregated from many different activities and sources.
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Brittni
2 months 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.
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Veronica
1 months ago
I agree, historical information is essential for ratio analysis to compare entities accurately.
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Veronica
2 months ago
I think E is actually a valid answer because ratio calculations are based on historical information.
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Beckie
2 months ago
But what about option D? Revaluing assets can also impact ratio analysis, right?
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Tresa
2 months ago
I agree with Detra, different depreciation estimates can make comparisons difficult.
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Casie
2 months ago
I agree, and I'd add that D also reduces comparability since different asset valuation policies skew the ratios.
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Alesia
1 months ago
I agree, and I'd add that D also reduces comparability since different asset valuation policies skew the ratios.
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Britt
1 months ago
E) Ratio calculations being based on historical information.
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Katy
2 months ago
B) Accounting estimates in respect of depreciation being different between entities.
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Nell
2 months ago
A) The revenue figure being aggregated from many different activities and sources.
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My
2 months ago
A and B definitely reduce the usefulness of ratio analysis. Accounting differences between companies make it hard to compare apples to apples.
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Detra
3 months ago
I think option B reduces the usefulness of ratio analysis.
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