The correct answer is: B. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Ratio analysis is a tool used to evaluate a company’s financial health by comparing its performance to its own historical performance and to the performance of other companies in the same industry. Ratio analysis can be used to identify areas where a company is doing well and areas where it needs to improve.
However, ratio analysis is not the only tool available to take an investment decision. Other factors that should be considered include the company’s management team, its products or services, its industry, and the overall economic environment.
In conclusion, both (A) and (R) are true, but (R) is not the correct explanation of (A). Ratio analysis is a useful tool for evaluating a company’s financial health, but it is not the only factor that should be considered when making an investment decision.
Here is a brief explanation of each option:
- Option A: Both (A) and (R) are true, and (R) is the correct explanation of (A). This option is incorrect because (R) is not the correct explanation of (A). Ratio analysis is a tool used to evaluate a company’s financial health, but it is not the only factor that should be considered when making an investment decision.
- Option B: Both (A) and (R) are true, but (R) is not the correct explanation of (A). This option is correct. Ratio analysis is a useful tool for evaluating a company’s financial health, but it is not the only factor that should be considered when making an investment decision.
- Option C: (A) is true, but (R) is false. This option is incorrect because (R) is true. Ratio analysis is a tool used to evaluate a company’s financial health.
- Option D: (A) is false, but (R) is true. This option is incorrect because (A) is true. Ratio analysis is a tool used to evaluate a company’s financial health.