Select the correct statements about financial ratios and income-statement ratios used in corporate analysis of construction firms.

Introduction / Context:Financial ratios condense complex statements into interpretable metrics for liquidity, solvency, profitability, and efficiency. Balance-sheet ratios capture a point-in-time financial position, while income-statement ratios relate period flows like revenue and expenses. This question checks awareness of these categories and their construction.

Given Data / Assumptions:

• Balance sheet presents stocks (assets, liabilities, equity) at a date.
• Income statement presents flows (revenue, costs) over a period.
• Ratios may mix or isolate sources depending on the analytic purpose.

Concept / Approach:

Balance-sheet-only ratios (e.g., current ratio) use two stock figures. Income-statement ratios (e.g., gross margin, operating margin) relate two flow measures. Cross-statement ratios (e.g., asset turnover) are also common but not the focus here; the listed statements are valid within their stated contexts.

Step-by-Step Solution:

Verification / Alternative check:

Corporate analysis handbooks classify ratios accordingly; auditors and sureties review both sets for contractors.

Why Other Options Are Wrong:

• Choosing any single statement misses the broader classification.

Common Pitfalls:

• Mixing stock and flow without interpreting the meaning (e.g., days sales outstanding).
• Ignoring seasonality when comparing ratios across firms.

Final Answer:

All of these