Student: Stanley

Analysis of Financial Statements

Please respond to the following: Determine why it is sometimes misleading to compare a company’s financial ratios with those of other firms that operate within the same industry. Support your response with one (1) example from your research. i will need a response to a student also this is the student response Danielle Debardelaben RE: Week 2 Discussion COLLAPSE Sometimes it can be confusing to compare a company’s financial ratios with other firms that operate within the same industry because each may use different accounting methods. Accounting information used in calculation of ratios is affected by the estimates, assumptions and diverse accounting methods used by companies. For example, a small company cares more about its ratios emphasis on current assets and liabilities instead of market value ratios. For example, a company that uses the FIFO method to value its inventory will have a higher inventory value compared to the company that uses LIFO. Ratios calculated from this type of data vary and provide false information when used to compare the two companies even if they operate in the same industry.

Budget: $5.00

Due on: January 14, 2020 00:00

Posted: 3 months ago.

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