Problems with ﬁnancial statement analysis include all of the following EXCEPT:
A) Many ﬁrms are conglomerates whose combined operations don't ﬁt any neat industry classiﬁcation.
B) The ﬁnancial statements of ﬁrms outside US and Canada do not necessarily conform to GAAP, making it diﬃcult to compare them to US and Canadian ﬁrms.
C) Firms may use different accounting procedures for inventory, making it diﬃcult to compare those using standard ﬁnancial ratios.
D) If two ﬁrms with seasonal operations end their ﬁscal years at different times, their ﬁnancial statements may be diﬃcult to compare.
E) Financial statements have little value since they cannot be used to calculate a ﬁrm's tax liability.

Question

Quizplus · Accepted Answer

The statement "Financial statements have little value since they cannot be used to calculate a firm's tax liability" is incorrect. Financial statements are the basis for calculating a firm's tax liability, among other uses. The other four options are accurate concerns with financial statement analysis.

Problems with ﬁNancial Statement Analysis Include All of the Following