Choose the correct statements about ratio analysis as applied to construction firm financial statements and performance evaluation.

Introduction / Context:Ratio analysis distills information from financial statements into actionable indicators. For project-based contractors, ratios inform bonding capacity, credit decisions, and internal performance reviews. Understanding definitions and sources of ratios is foundational to credible analysis.

Given Data / Assumptions:

• Ratios compare two accounting figures to express a relationship.
• Data typically come from the same statement for pure balance-sheet or income-statement ratios.
• Interpretation is as important as calculation.

Concept / Approach:

Examples: Current ratio (CA/CL) from the balance sheet; Gross margin (Gross profit/Revenue) from the income statement. Cross-statement ratios also exist (e.g., asset turnover), but the statements provided are correct in their intended context.

Step-by-Step Solution:

Verification / Alternative check:

Analyst guides and CPA review methodologies adopt the same definitions and procedures.

Why Other Options Are Wrong:

• Single statements omit essential aspects; 'None' contradicts common accounting practice.

Common Pitfalls:

• Interpreting ratios without context (seasonality, firm size, project mix).

Final Answer:

All of these