Which of the following statements about financial ratio analysis is not correct? ...
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Accounting
Which of the following statements about financial ratio analysis is not correct?
Liquidity ratios show the relationship of a firms current assets to its current liabilities. Current ratio and quick ratio are the most commonly used liquidity ratios.
Inventory turnover ratio, total assets turnover, and days in receivables are examples of asset management ratios. They measure how effectively the firm is managing its assets.
Comparative analysis is to examine the financial ratios of a particular firm against the same measures for a group of firms from the same industry, at a point in time.
Other things held constant, very successful firms such as Coca Cola, Microsoft, and Citibank will have a high market-to-book value ratio.
Return on assets (ROA) and return on equity (ROE) are the most commonly used market value ratios.
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