CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following statements DOES NOT represent a limitation of financial ratios?

A. There are accounting differences across firms.
B. They are hard for users to understand.
C. Many firms have divisions that are unlike one another with different accounting ratios.
D. Inconsistency among ratios, which may not agree with each other.
Correct Answer: B

This is not a limitation. Ratios are not hard to understand.

User Contributed Comments 10

User Comment
julescruis If you got this right, you may get a beer and watch tv, I will
hannovanwyk sounds good, feel better with this work than all the other accounting!
copus maybe I have a big mental block on accounting, but these darn ratios are not that easy for me to understand....I´m off to have a couple of beers to find some accounting inspiration!
JakeZ riiiiiiiiiiiiiiiiiight
I am an Accounting/Finance grad and some of these ratios are hard to understand.
DonAnd shame on you JakeZ!!!
jayj001 brilliant explanation lol
thegeneral101 i was a finance and accounting major and these ratios can still be tricky. love this question lol
jonan203 "accounting ratios are not hard to understand"

whoever wrote this question did it for the lulz...
Logaritmus But for me it was clear that A,C and D are fairly obvious limitations of financial ratios. By elimination i will point @ B.
mn158 I laughed so hard at the explanation !
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