True/false 1. Ratios and various other anayltical measures are not a substitute

Question

True/false
1. Ratios and various other anayltical measures are not a substitute for sound judgement, nor do they provide definitive guides for action.
2. In computing the ratio of net sales assest, any long term investments are excluded from total assests.
3. The rate earned on total assest measures the profitabilty of total assests without considering how the assests are financed.
4. The effects in differences in accounting methods are of little importance when analyzing comparable data from competing business.

Explanation / Answer

True/false 1. Ratios and various other anayltical measures are not a substitute for sound judgement, nor do they provide definitive guides for action. True 2. In computing the ratio of net sales assest, any long term investments are excluded from total assests. False 3. The rate earned on total assest measures the profitabilty of total assests without considering how the assests are financed. True 4. The effects in differences in accounting methods are of little importance when analyzing comparable data from competing business. False

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