D076 Unit 4 - Assessment, Quiz, Unit Test Question and
answers verified to pass 2025/2026
Which statement below is an example of how ratios are A firm's
ratios are com-
used in the field of finance? pared with those of a
benchmark peer
- Ratio analysis is performed based on a strict group to determine the
set of
firm's rela-
rules governed by generally accepted accounting prin- tive strength
and perfor-
ciples. mance.
- A firm's ratios may vary year over year, so they
are not helpful for evaluating whether firm
goals are met.
- Ratios are helpful only when comparing
companies that are the same size and that use
the same opera-tional style.
- A firm's ratios are compared with those of a
bench-mark peer group to determine the
firm's relative strength and performance.
Because they are not
2. Why are ratios considered flexible? regu-lated and can be
changed or invented
- Because there are five ratios that must always
be according to a
calculated and then reported on public financial state- firm's needs
ments
- Because they are not regulated and can be
changed or invented according to a firm's
needs
- Because they do not require historical
financial data in order to analyze a firm
- Because they are based on estimates and thus
do not have to be exact
3. How might calculating financial ratios help sharehold- Ratios can be
1/
27
,used to de-
ers? termine whether a firm
is maximizing
- Ratios can be used to determine whether a
shareholder wealth.
firm is maximizing shareholder wealth.
2/
27
, D076 Unit 4 - Assessment, Quiz, Unit Test
Ratios help shareholders audit firms to make
sure they are in accordance with GAAP
standards.
- Ratios can be used to know what exactly is
happening in a firm by answering questions
about the firm.
- Ratios allow shareholders to participate in
manage-ment decisions.
Liquidity ratios
4. What type of ratio is used to assess a firm's
ability to meet short-term obligations without
raising external capital?
Profitability ratios
Market ratios
Activity ratios
Liquidity ratios
5. The firm Betsy's Books conducts a financial analysis us- Benchmarking
ing ratios to know how it is performing in
comparison to other similar firms. What is this
process called?
Equity valuation
Maximization
Benchmarking
Auditing
6. Why are several different types of ratios used Because ditterent types
to ana-lyze a firm? of ratios are needed
to get information
about ditter-
- Because certain types of ratios become obsolete as a ent parts of a
firm.
firm innovates
3/
27
answers verified to pass 2025/2026
Which statement below is an example of how ratios are A firm's
ratios are com-
used in the field of finance? pared with those of a
benchmark peer
- Ratio analysis is performed based on a strict group to determine the
set of
firm's rela-
rules governed by generally accepted accounting prin- tive strength
and perfor-
ciples. mance.
- A firm's ratios may vary year over year, so they
are not helpful for evaluating whether firm
goals are met.
- Ratios are helpful only when comparing
companies that are the same size and that use
the same opera-tional style.
- A firm's ratios are compared with those of a
bench-mark peer group to determine the
firm's relative strength and performance.
Because they are not
2. Why are ratios considered flexible? regu-lated and can be
changed or invented
- Because there are five ratios that must always
be according to a
calculated and then reported on public financial state- firm's needs
ments
- Because they are not regulated and can be
changed or invented according to a firm's
needs
- Because they do not require historical
financial data in order to analyze a firm
- Because they are based on estimates and thus
do not have to be exact
3. How might calculating financial ratios help sharehold- Ratios can be
1/
27
,used to de-
ers? termine whether a firm
is maximizing
- Ratios can be used to determine whether a
shareholder wealth.
firm is maximizing shareholder wealth.
2/
27
, D076 Unit 4 - Assessment, Quiz, Unit Test
Ratios help shareholders audit firms to make
sure they are in accordance with GAAP
standards.
- Ratios can be used to know what exactly is
happening in a firm by answering questions
about the firm.
- Ratios allow shareholders to participate in
manage-ment decisions.
Liquidity ratios
4. What type of ratio is used to assess a firm's
ability to meet short-term obligations without
raising external capital?
Profitability ratios
Market ratios
Activity ratios
Liquidity ratios
5. The firm Betsy's Books conducts a financial analysis us- Benchmarking
ing ratios to know how it is performing in
comparison to other similar firms. What is this
process called?
Equity valuation
Maximization
Benchmarking
Auditing
6. Why are several different types of ratios used Because ditterent types
to ana-lyze a firm? of ratios are needed
to get information
about ditter-
- Because certain types of ratios become obsolete as a ent parts of a
firm.
firm innovates
3/
27
