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Ratios Should Not Be Used to Compare Two Companies in Different

Question 3

Multiple Choice

Ratios should not be used to compare two companies in different industries since wide variations across industries can occur.But even within an industry, sometimes comparisons can be problematic.Which of the following is/are a reason(s) for concern?


A) Methods of calculating ROE may differ between analysts
B) Company choice between weighted average and FIFO inventory valuations
C) Companies are based in different countries
D) All of these are reasons for concern.

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