Practice - Limitations of Ratio Analysis
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Practice Questions
Test your understanding with targeted questions
What is the first limitation of ratio analysis?
💡 Hint: Think about what kinds of factors analysis usually considers.
Explain what window dressing is.
💡 Hint: Consider how companies might portray themselves in a favorable light.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is a critical limitation of ratio analysis?
💡 Hint: Think about what types of information are often measured.
True or False: Historical data is always reliable for predicting future performance.
💡 Hint: Consider how market conditions can shift over time.
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Challenge Problems
Push your limits with advanced challenges
A company shows a significant current ratio improvement over three years. However, market share is declining. Discuss the implications of this situation.
💡 Hint: Focus on both the financial data and what it means for the company's health in the market.
If two companies in different industries had the same debt-equity ratio, can you accurately assess their financial health? Why or why not?
💡 Hint: Think about differences in financing structures across industries.
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