In a recent staff meeting, David Hurley, stated that analysts should understand that financial ratios mean little by themselves. He advised his colleagues to evaluate financial ratios carefully. During the discussion he made the following statements: Statement 1 : A company can be compared with others in its industry by relating its financial ratios to industry norms. However, care must be taken because many ratios are industry-specific, but not all ratios are important to all industries. Statement 2: Comparing a company to the overall economy is useless because overall business conditions are constantly changing. Specifically, it is not the ease that financial ratios tend to improve when the economy is p and weaken during recessionary times. Are statements 1 and 2 as made by Hurley regarding financial ratio analysis correct Statement 1Statement 2（）①A. Incorrect Correct ②B. Incorrect Incorrect ③C. CorrectIncorrect
A. ①
B. ②
C. ③
参考答案：C
解析：
Financial ratios are meaningless by themselves. To have meaning an analyst must use them with other information. An analyst should evaluate financial ratios based on industry norms and economic conditions. Statement 1 is correct. However, statement 2 is not because financial ratios tend to improve when the economy is strong and weaken when the economy is in a recession. So, financial ratios should be reviewed in light of the current stage of the business cycle.