A Limitation of Ratio Analysis Is That

Multiple Choice

A limitation of ratio analysis is that:

A) it is useful only for large, multidivisional firms.
B) inflation, which distorts a firm's balance sheet, is considered when calculating ratios.
C) seasonal factors, which distort a firm's balance sheet, are taken into account when calculating ratios.
D) firms can employ window-dressing techniques to make their financial statements look better.
E) only statistical procedures are considered while analyzing the net effects of a set of ratios.