Different accounting methods can cause some ratios to differ substantially.

Question

Quizplus · Accepted Answer

Different accounting methods can result in differences in how certain items are recorded, which can in turn affect the ratios calculated from financial statements. For example, the use of different depreciation methods can impact a company's asset turnover ratio. Therefore, it is important to consider the accounting methods used when analyzing financial ratios.

Different Accounting Methods Can Cause Some Ratios to Differ Substantially