QUESTION 1 Which of the following statements is true? An investor\'s objective i

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QUESTION 1 Which of the following statements is true? An investor's objective is to determine the ability of a firm to make interest and principal payments. A creditor's objective is ultimately concerned with estimating a company's future earnings. A creditor is ultimately concerned with the company's performance record, risk inherent in the capital structure, and the competitive position of the company. The investment analyst uses historical financial statement data to forecast the future with the ultimate objective to determine whether the investment is sound. QUESTION 2 Which of the following statements is true? A definitive list of "rules of thumb" has been created for analysts to use when interpreting ratios. When analyzing financial ratios each situation should be evaluated within the context of the particular firm, industry, and economic environment. Financial ratios are used to predict future events. A uniform definition of each ratio exists to help analysts.

Explanation / Answer

ans 1 Option D Investment analyst uses historical financial statement data to forecast the future with the ultimate objective to determine whether the investment is sound. when an investment needs to be made than the investment analyst uses the historical data, calculate the financial ratios, trend analysis etc to forecast the future to know whether the investment is sound r not ans 2 b) When analysing financial ratios each situation should be evaluated with the context of firm,industry and economic enviornment. When we analyse the finnacial ratio we calcuate the firm ratio and compare it with industry ratio to know that the firm is performing well or not.

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