1. Ratio analysis A company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company's strengths, weaknesses, performance in specific areas, and trends in performance. These analyses are often used to compare a company's performance to that of its competitors, or to its past or expected future performance. Such insight helps managers and analysts improve their decision making. Consider the following scenario: You work as an analyst at a credit-rating agency, and you are comparing firms in the construction and engineering sector. One company in the portfolio of companies you are analyzing is a Chinese firm. This firm stands out in the ratio analysis, because the company's financial ratios are substantially lower than identical financial ratios of the other firms in the sector. You do not dissect the results of the ratio analysis and categorize report this firm as an under-performing company. Which of the following statements about your analysis report is true? O The ratios provide an accurate and thorough representation of the Chinese company's performance. The analysis likely includes incorrect and misleading conclusions. There are several groups of ratios most decision makers and analysts use to examine different aspects of a company's performance. Based on the descriptions of ratios listed, identify the relevant category of ratios. Ratios that help determine whether a company can access its cash and pay its debts that mature in less than a year are called ratios. market value or market-based ficiently a firm is using its assets to generate sales are called ratios. debt or financial leverage management to service the interest and repayment obligations on its long-term debt and the degree to are called ratios. liquidity ratios help measure a company's ability to generate income and profits based on it dividend policy profitability w ratios examine the market value of a company's share price, its profits and cash div memuate them to other data items to determine how the firm is perceived in the stock market. voor vrou . 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It can provide great insights into how a comp Ratios that help assess a company's ability to service the interest and repayment obligations on its long-term debt and the degree to which it uses borrowed versus invested financial capital are called ratios. generate income and profits based on its invested dividend policy capital. ra market value or market-based ny's share price, its profits and cash dividends, and the book value of the firm's assets and relate them t Irm is perceived in the stock market. debt or financial leverage management asset management or activity at insights into how a company matches up against Ratio analysis is an important component of evaluating itself over time and against other players within the ind profitability However lilca man tools and techniquer atin analycir bacfom limitation and Molenocco ratios help measure a company's ability to generate income and profits based on its invested Market value or market-based ratios examine the market value of a company's share price, its profits and cash dividends, and Debt or financial leverage management te them to other data items to determine how the firm is perceived in the stock market. Asset management or activity Rai evaluating company performance. It can provide great insights into how a company matches up against hin the industry. Profitability Dividend policy jo analysis has a few limitations and weaknesses. ratios examine the market value of a company's share price, its profits and cash dividends, and te them to other data items to determine how the firm is perceived in the stock market. Asset management or activity Profitability evaluating company performance. It can provide great insights into how a company matches up against hin the industry. Dividend policy io analysis has a few limitations and weaknesses. Market value or market-based WH Debt or financial leverage management weakness or limitation of ratio analysis? Check all that apply. Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against itself over time and against other players within the industry. However, like many tools and techniques, ratio analysis has a few limitations and weaknesses. Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply. O A firm may operate in multiple industries. Different firms may use different accounting practices. O A firm's financial statements show only one period of financial data