What is the risk of comparing financial ratios reported by different companies?
A)Financial ratios have multiple formulations.
B)Financial ratios have only one formulation.
C)Financial ratios all produce the same answer.
D)Financial ratios are disallowed by some companies.

Question

Quizplus · Accepted Answer

Financial ratios can be calculated using different formulas and may not necessarily be comparable across different companies. Therefore, comparing financial ratios reported by different companies may not be a reliable way to analyze their financial performance.

What Is the Risk of Comparing Financial Ratios Reported by Different