WGU C214 - Financial Management -
Ch. 4 - Ratio Analysis Question and
answer already passed 2025/2026
Which one of the following is NOT an example of meaningful ratio analysis?
- Using GAAP rules to calculate standard ratios.
- Using ratios to compare a firm with high performing competitors.
- Using ratios to assess goal achievement.
- Analyzing the trend in ratios over time for a single firm. - correct answer ✔Using GAAP rules to
calculate standard ratios.
The flexibility aspect of ratios and ratio analysis refers to which of the following?
- Ratios determine the financial flexibility of a company.
- firms of different size can be compared on the same scale.
- Analysts can create new ratios if needed.
- Ratios can be used to compare a firm to the industry's top performers. - correct answer ✔Analysts can
create new ratios if needed.
Which one of the following ratios is NOT part of the common ratio categories?
Operating
Liquidity
Financing
Profitability - correct answer ✔Operating
, Suppose an analyst is reviewing the profitability ratios for a firm.
Which of the following statements represents the most valid insight for the analyst?
- Since the profitability ratios of the firm improved, the firm is obviously headed in the right direction.
- Since the profitability ratios of the firm declined, the firm is facing serious competitive pressures.
- Since the profitability ratios of the firm improved, the firm is not subject to competitive pressures.
- Since the profitability ratios of the firm declined, the analyst devotes additional effort to understanding
revenues and costs. - correct answer ✔- Since the profitability ratios of the firm declined, the analyst
devotes additional effort to understanding revenues and costs.
Ratios help identify the areas of a firm that need investigation. (T/F) - correct answer ✔True
Consider two companies, Hoogle and Mapple. They are economically identical. However, for reporting
purposes Hoogle uses the managerial discretion that is required with accrual accounting to increase net
income relative to Mapple (assume any balance sheet effects are inconsequential). Which of the
following is correct:
- Hoogle's OIROI is higher than Mapple's and Hoogle is more efficient.
- Mapple's OIROI is higher than Hoogle's and Mapple is more efficient.
- Mapple's OIROI is higher than Hoogle's but Mapple is NOT more efficient.
- Hoogle's OIROI is higher than Mapple's but Hoogle is NOT more efficient. - correct answer ✔Hoogle's
OIROI is higher than Mapple's but Hoogle is NOT more efficient.
Which of the following best describes the problem associated with GAAP accounting standards when
performing ratio analysis?
- GAAP accounting standards are too simplistic for most firms.
Ch. 4 - Ratio Analysis Question and
answer already passed 2025/2026
Which one of the following is NOT an example of meaningful ratio analysis?
- Using GAAP rules to calculate standard ratios.
- Using ratios to compare a firm with high performing competitors.
- Using ratios to assess goal achievement.
- Analyzing the trend in ratios over time for a single firm. - correct answer ✔Using GAAP rules to
calculate standard ratios.
The flexibility aspect of ratios and ratio analysis refers to which of the following?
- Ratios determine the financial flexibility of a company.
- firms of different size can be compared on the same scale.
- Analysts can create new ratios if needed.
- Ratios can be used to compare a firm to the industry's top performers. - correct answer ✔Analysts can
create new ratios if needed.
Which one of the following ratios is NOT part of the common ratio categories?
Operating
Liquidity
Financing
Profitability - correct answer ✔Operating
, Suppose an analyst is reviewing the profitability ratios for a firm.
Which of the following statements represents the most valid insight for the analyst?
- Since the profitability ratios of the firm improved, the firm is obviously headed in the right direction.
- Since the profitability ratios of the firm declined, the firm is facing serious competitive pressures.
- Since the profitability ratios of the firm improved, the firm is not subject to competitive pressures.
- Since the profitability ratios of the firm declined, the analyst devotes additional effort to understanding
revenues and costs. - correct answer ✔- Since the profitability ratios of the firm declined, the analyst
devotes additional effort to understanding revenues and costs.
Ratios help identify the areas of a firm that need investigation. (T/F) - correct answer ✔True
Consider two companies, Hoogle and Mapple. They are economically identical. However, for reporting
purposes Hoogle uses the managerial discretion that is required with accrual accounting to increase net
income relative to Mapple (assume any balance sheet effects are inconsequential). Which of the
following is correct:
- Hoogle's OIROI is higher than Mapple's and Hoogle is more efficient.
- Mapple's OIROI is higher than Hoogle's and Mapple is more efficient.
- Mapple's OIROI is higher than Hoogle's but Mapple is NOT more efficient.
- Hoogle's OIROI is higher than Mapple's but Hoogle is NOT more efficient. - correct answer ✔Hoogle's
OIROI is higher than Mapple's but Hoogle is NOT more efficient.
Which of the following best describes the problem associated with GAAP accounting standards when
performing ratio analysis?
- GAAP accounting standards are too simplistic for most firms.
