As an accountant who frequently prepares financial statements for firms, Hina is well-aware of the concept of the financial ratio. Which of the following is correct regarding a financial ratio? It is a number that shows the relationship between three or more elements of a firm's financial statements. Although it can accurately and effectively measure a firm's profitability and how often it sells its inventory, it cannot measure a firm's ability to pay its debts. Although it can be compared with a firm's past ratios from previous accounting periods, it cannot be accurately or effectively compared with the ratios of competitors, or with industry averages. The information required to form a financial ratio can be found in a firm's balance sheet, income statement, and statement of cash flows