When Using Financial Ratios to Analyze a Company's Ability to Maximize

Multiple Choice

When using financial ratios to analyze a company's ability to maximize shareholders' wealth, all of the following cautions should be considered EXCEPT ____.

A) financial ratios are flags indicating potential areas of strength or weakness
B) a financial ratio must be dissected to discover its true meaning
C) a financial ratio must be compared to some standard
D) although there may be accounting differences between companies, these differences do not impact financial ratios