Which of the following is a limitation of financial ratios? Ratios can't be compared Ratios are not predictive Ratios only help to unveil company weaknesses Company reported financial numbers are often inaccurate, thus leading to inaccurate ratios Earnings projections are required to be discussed in Management's Discussion and Analysis of the Financial Condition and Results of Operations. True False Which profit margin measures the operating efficiency of the firm? Operating profit margin Gross profit margin Net profit margin Return on assets What is the primary objective of financial statement analysis? To better understand the personality of firm leadership To provide management with recommendations of how the firm should improve To determine whether or not an investment is warranted by estimating a company's future earnings stream To understand the likelihood of a firm engaging in a merger Which of the following statements is true? Component percentages are often used to compare a company to itself in prior years or to compare a company to other companies at a point in time, but ratio analyses are not. Ratio analyses are often used to compare a company to itself in prior years or to compare a company to other companies at a point in time, but component percentages are not. Ratio analyses are a type of component percentages in which multiple line items are all scaled by a single base amount such as total sales or total assets Component percentages are a type of ratio analysis in which multiple line items are all scaled by a single base amount such as total sales or total assets