Question

State whether the following statement is True or False.

A ratio is always expressed as a quotient of one number divided by another.

Answer 1

This statement is false.

Explanation:

While a ratio is calculated by dividing one number by another, it is not always expressed as a simple quotient or fraction. In financial analysis, ratios are presented in four different ways depending on their purpose. They can be shown as a pure relationship like 2 : 1, as a percentage such as 25%, as a turnover frequency expressed in number of “times”, or as a fraction. Because a ratio can take multiple formats rather than being limited only to a quotient, the statement is false.