Question

Financial ratios

A) are used during the planning and final review phases of the audit.
B) can be linked to the trial balance so that calculations are automatically updated as adjustments are made.
C) should be compared to previous years and industry averages.
D) all of the above

Answer 1

Financial ratios are used to evaluate the financial performance of a company during the planning and final review phases of the audit. They can be linked to the trial balance for automatic updates, and should be compared to previous years and industry averages.

Step-by-step explanation:

Financial ratios are used to evaluate the financial performance of a company. They help during the planning and final review phases of the audit by providing insights into the company's liquidity, profitability, and efficiency. When linked to the trial balance, financial ratios can automatically update as adjustments are made. Additionally, comparing financial ratios to previous years and industry averages can provide a benchmark for assessing the company's performance and identifying areas for improvement.