Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 7, Problem 6Q

Why is it sometimes misleading to compare a company’s financial ratios with those of other firms that operate in the same industry?

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What are the Limitations of Financial Ratios in Business Decisions?
Which is not a potential problem of utilizing ratio analysis? A. trends and industry averages are historical in nature. B. financial data may be distorted due to price-level changes. C. firms within an industry may not use similar accounting methods. D. all of the above E. answer not given
Explain the Limitations of Financial Ratios in Business Decisions?
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