Which of the following statements about financial ratio analysis is not correct? ...
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Accounting
Which of the following statements about financial ratio analysis is not correct?
- Liquidity ratios show the relationship of a firms current assets to its current liabilities. Current ratio and quick ratio are the most commonly used liquidity ratios.
- Inventory turnover ratio, total assets turnover, and days in receivables are examples of asset management ratios. They measure how effectively the firm is managing its assets.
- Comparative analysis is to examine the financial ratios of a particular firm against the same measures for a group of firms from the same industry, at a point in time.
- Other things held constant, very successful firms such as Coca Cola, Microsoft, and Citibank will have a high market-to-book value ratio.
- Return on assets (ROA) and return on equity (ROE) are the most commonly used market value ratios.
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