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How is profit for the year calculated

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Reference no: EM132656019

Problem 1: A times-interest-earned ratio of 4.8 times is better than a times-interest-earned ratio of 5.3 times. How is profit for the year calculated?

Group of answer choices

Option 1: by deducting assets from liabilities

Option 2: by deducting income tax expense from profit before taxes

Option 3: by deducting liabilities from assets

Option 4: none of these

Option 5: by deducting cost of sales from sales revenue

Problem 2: Which of the following statements best describes the limitation of financial ratios.

Group of answer choices

Option 1: Financial ratios tell a story and give management options for improving performance.

Option 2: Financial ratios are best used internally and can be misinterpreted when used by lenders or investors.

Option 3: None of these.

Option 4: Financial ratios are difficult to calculate, change over time, and acceptable levels vary among different industries.

Option 5: Financial ratios tell where a particular operation is or is not doing well but doesn't report why or how to improve the situation.

Reference no: EM132656019

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