Peer group analysis can be performed by
A) management choosing a set of firms that are similar in size or sales, or who compete in the same market.
B) using the average ratios of this peer group, which would then be used as the benchmark.
C) identifying firms in the same industry that are grouped by size, sales, and product lines in order to establish benchmark ratios.
D) Only a and b relate to peer group analysis.
Answer: D
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FIN202 Chapter 4
- There are those that believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis?
- Which of the following is not a method of "benchmarking"?
- Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
- Which of the following is a benefit of a common-size income statement?
- Limitations of ratio analysis include all but
- Which one of the following statements about trend analysis is NOT correct?
- Which one of the following is NOT an advantage of using ROE as a goal?
- Which one of the following is a criticism of equating the goals of maximizing the ROE of a firm and maximizing the firm's shareholder wealth?
- The DuPont equation shows that a firm's ROE is determined by three factors:
- Which one of the following statements is NOT correct?
- For a firm that has both debt and equity,
- For a firm that has no debt in its capital structure,
- Coverage ratios, like times interest earned and cash coverage ratio, allow
- Which one of the following statements is NOT correct?
- If firm A has a higher debt-to-equity ratio than firm B, then
- Which one of the following statements is correct?
- One of the following statements is NOT true of asset turnover ratios.
- Which one of the following statements is NOT true?
- All but one of the following is true about the inventory turnover ratio.
- All else being equal, which one of the following will decrease a firm's current ratio?
- Which one of the following does NOT change a firm's current ratio?
- All but one of the following is true about quick ratios.
- Which of the following is NOT true of liquidity ratios?
- Which of the following is true of ratio analysis?
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.