The most acceptable method of evaluating the financial statements is to compare the company's current financial: (A) statements to the projections that were created based on Tobin's Q. (B) statements to those of larger companies in unrelated industries. (C) statements to the financial statements of similar companies operating in other countries. (D) ratios to the average ratios of all companies located within the same geographic area. (E) ratios to the company's historical ratios.

Question

Business

Odin

9 August, 00:17

The most acceptable method of evaluating the financial statements is to compare the company's current financial: (A) statements to the projections that were created based on Tobin's Q. (B) statements to those of larger companies in unrelated industries. (C) statements to the financial statements of similar companies operating in other countries. (D) ratios to the average ratios of all companies located within the same geographic area. (E) ratios to the company's historical ratios.

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Answers (1)

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Shiloh Burgess · Answer 1

The correct answer is letter "E": ratios to the company's historical ratios.

Explanation:

While comparing a company's performance over the years, the financial statement ratios of the current and previous periods must be reviewed. The main ratios checked should be the Working Capital Ratio, Quick Ratio, Price-to-Earnings ratio, and Debt-Equity Ratio.