Question

State whether the following statement is True or False.

Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises.

Answer 1

This statement is true.

Explanation:

Ratios are used to compare a firm’s performance over several accounting periods (time‑series or intra‑firm analysis) and to compare the firm with other businesses or industry benchmarks (cross‑sectional or inter‑firm analysis), so they reveal trends and relative position; see the explanation of cross‑sectional and time‑series ratio analysis and the related exercise answer in the provided materials.