Financial ratios are often reported by industry or line of business because differences in the type of business can make ratio comparisons uninformative or even misleading.

Question

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Financial ratios can vary significantly based on the industry or line of business, as different types of businesses operate with different cost structures, profit margins, and operating models. Comparing ratios across different industries can be uninformative or even misleading, as what may be considered good or bad ratios in one industry may not hold true in another industry. Therefore, financial ratios are typically reported by industry or line of business to provide more relevant and useful comparisons.

Financial Ratios Are Often Reported by Industry or Line of Business