When performing financial statement ratio analysis, it may be difficult to compare some of the ratios...
When performing financial statement ratio analysis, it may be difficult to compare some of the ratios of two companies in the same industry if their accounting policies are different in key areas, for example different inventory and cost of goods sold policies. TRUE OR FALSE
Homework Answers
The given statement is TRUE.
The company can follow different policies such as LIFO/FIFO method for calculation cost of goods sold and valuation of inventory. This leads to a significant difference in the major figures and accordingly it will affect ratios
Hence , it is difficult to compare some ratio of companies following different accounting policies.
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When performing financial statement ratio analysis, it may be difficult to compare some of the ratios...
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Edition.
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is ISBN: 9781111222284 Introduction to Corporate Finance Third
Edition.
Chapter 2 Financial Statement and Cash Flow Analysis 65 Balance Sheet (in 000s) Cash Accounts receivable Inventory Total current assets Net fixed assets Total assets $ 5,000 20,000 40,000 $ 65,000 135,000 $200,000 Accounts payable Notes payable Total current liabilities Long-term debt Stockholder equity Total liabilities...
TB TF Qu. 03-127 The financial statement ratio that may be of... The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return-on-assets ratio True or False True False
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