Question : Choose the correct statement:
Statement 1: Cross-sectional Analysis compares a firm's ratios to those of a few chosen companies in the same industry or to the industry average at the same period. A similar comparison is beneficial in determining the firm's relative performance.
Statement 2: Comparing a company's present ratios to its prior ratios is another technique to make comparisons using time-series analysis.
Option 1:
Statement 1 is correct, Statement 2 is wrong
Option 2: Statement 2 is correct, Statement 1 is wrong
Option 3: Both Statements are correct
Option 4: Both Statements are wrong
Correct Answer: Both Statements are correct
Solution : Cross-sectional Analysis means comparing a firm's ratios to those of a few chosen companies in the same industry or the industry average at the same period. A similar comparison is beneficial in determining the firm's relative performance. And to compare a firm's current ratios with its historical ratios called time-series analysis. Hence, the correct option is 3.
Question : Choose the correct statement
Statement 1: In order to interpret financial statements in a useful way, ratio analysis involves a comparison that provides a good interpretation of the financial statement. Statement 2: An individual ratio by itself cannot determine if a position is favorable or unfavorable. It should be compared to another company in the same industry or to previous ratios of the same company.
Option 1: Statement 1 is correct, Statement 2 is wrong
Option 2: Statement 2 is correct, and Statement 1 is wrong
Option 3:
Both Statements are correct
Question : Statement 1: Current Ratio of 2:1 is considered an Ideal Ratio.
Statement 2: Quick Ratio of 1:1 is considered an Ideal Ratio.
Question : Which of the following is the Objective of Ratio Analysis?
It provides the data for cross-sectional analysis, for comparison with some chosen enterprises in the same industry.
Option 2: To offer data for time-series analysis, i.e., to compare a firm's present ratios with its historical ratios.
Option 3: Both (1) and (2)
Option 4: None of the above
Question : Statement 1: The supervisor's role includes providing technical guidance and feedback.
Statement 2: The supervisor's role is limited to assigning tasks to employees.
Option 1: Both statements are correct.
Option 2: Statement 1 is correct, and statement 2 is false.
Option 3: Both statements are incorrect.
Option 4: Statement 2 is correct, and statement 1 is incorrect.
Question : Statement 1: The supervisor's role involves guiding, instructing, and motivating employees.
Statement 2: The supervisor's role is limited to monitoring employee activities.
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