Finance and Accounting Strategy

Financial ratios allow quick and easy comparison between businesses

• Advantage of financial ratio

• Disadvantage of financial ratio

Companies can window dress their statistics, which might make them misleading from the perspective external stakeholders

• Advantage of financial ratio

• Disadvantage of financial ratio

Financial ratios only explain what has happened, and does not necessarily explain why it has happened

• Advantage of financial ratio

• Disadvantage of financial ratio

Financial ratios are prone to the flaw of averages, which might mask important details

• Advantage of financial ratio

• Disadvantage of financial ratio

Identify which statement is best describes window dressing

• accounts focus on historical financial events rather looking into d future

• Theproblems that arise when averages are used torepresent uncertain outcome

• Creative Accounting that could lead the user of the accounts to be misled

• The standardised system of accounting used all over the world

The graph show the monthly profit in a given year. Does the statistic alone accurately summarise the plight of the business

• Yes, the flaw avergaes mask period of profit make

• No, the flaw averages masks periods of loss make

Window dressing is the deliberate and fraudulent deception of users accounts

• True

• False

Because ratios are averages, they always paint a full and complete picture of a company's accounts

• True

• False

Financial ratios are widely used all over the world by financial journalists and analysts

• True

• False

Financial ratios are widely used all over the world by financial journalists and analysts

• True

• False