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Select the incorrect statement regarding ratio analysis. 4) A) Some ratios involve an account from the...

Select the incorrect statement regarding ratio analysis. 4) A) Some ratios involve an account from the balance sheet and one from the income statement. B) There are many different ratios available for evaluating a firm's performance. C) Ratio analysis involves making comparisons between different accounts in the same set of financial statements. D) Ratio analysis is a specific form of horizontal analysis.

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Answer #1

Answer is D) Ratio analysis is a specific form of horizontal analysis.

Horizontal analysis is financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time where as Ratio analysis is a quantitative analysis of different information gathered from the financial statement of the company. Different line items in the financial statements of the company like balance sheet, income statement, cash flow statement, etc. are used by the management to determine the key ratios which are easy to analyse and interpret and give an idea of the performance of the company.

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