Which statements describes the limitation of financial ratio

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Reference no: EM132656132

Problem 1: Ford has a times-interest-earned ratio of 4.8 times, and Toyota has a times-interest-earned ratio of 5.3 times. What conclusions would Ford's chief financial officer arrive at looking at these numbers and Toyota's ratio?

Group of answer choices

Option 1: Toyota is in a better position to cover its interest costs than Ford.

Option 2: Ford is in a better position to pay interest than Toyota.

Option 3: None of these.

Option 4: The times-interest-earned ratio is of no interest to lenders because the ratios are so close together.

Option 5: A times-interest-earned ratio of 4.8 times is better than a times-interest-earned ratio of 5.3 times.

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.

Problem 3: What is the correct date line for a statement of financial position?

Group of answer choices

Option 1: for the year ended December 31, 2015

Option 2: none of these

Option 3: as at December 31, 2015

Option 4: for the accounting year ended December 31, 2015

Option 5: from December 31, 2015

Reference no: EM132656132

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