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Exam Code: SCS-C01

Exam Name: AWS Certified Security - Specialty

Certification Provider: Amazon

Related Certification: AWS Certified Security - Specialty

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NEW QUESTION: 1
All of the following would be regarded as limitations in using ratio analysis, except:
A. It is sometimes misleading to compare firm ratios to an industry average, since it is very common for firms to be operating in a multitude of industries.
B. Even if a firm maintains consistent accounting policies, times series financial ratio analysis for a firm may be misleading if the state of the economy has changed over that period.
C. Sometimes, different sets of financial ratios will give conflicting signals about the firm's prospects.
Answer: B
Explanation:
If a firm maintains consistent accounting policies, that eliminates the main cause of inconsistency caused by availability of many accounting methods. Therefore, conducting a time series financial ratio analysis for a firm may uncover some very certain microeconomic relationships, even if the state of the economy has changed over that period.


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