One simplifying characteristic of ratio analysis is that once we have created common size statements,the benchmarking of industry ratios becomes redundant because all industries have the same ratios when using common size values.

Question

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While common size statements help to standardize financial ratios for comparison, it does not mean that all industries will have the same ratios. Different industries have different business models and varying levels of profitability, liquidity, and leverage. Therefore, benchmarking industry ratios remains an important aspect of ratio analysis to identify industry trends and compare the performance of a company to its peers.

One Simplifying Characteristic of Ratio Analysis Is That Once We