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29 November, 08:12

Analysts agree that extraordinary gains/losses should be excluded from ratio analysis because they are one-time events, and can distort annual results from normal operations.

True or False?

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  1. 29 November, 10:18
    0
    The statement is: True.

    Explanation:

    Ratio Analysis is the quantitative analysis of financial information from a company's financial statements or shares price. Ratios are keys to financial analysis as they provide input for evaluating a company to its competitors or an industry benchmark. Ratios provide the vital signs used to measure corporate health, allowing investors to drill down to specific aspects of the company's operational status.

    As gains and losses are not derived directly from the primary operations of a firm, analysts tend to consider them counterproductive in obtaining the ratio analysis of a company.
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