Different accounting practices will not have an impact on the comparative ratio analysis of the firms.

Question

Quizplus · Accepted Answer

Comparative ratio analysis involves comparing financial ratios of different companies to evaluate their financial performance. However, if the companies use different accounting methods, the ratios may not be comparable due to differences in the way financial information is reported. For example, a company using the LIFO inventory valuation method may report lower profits than a company using the FIFO method, affecting the profitability ratios. Therefore, different accounting practices can have a significant impact on comparative ratio analysis, making option B the correct answer.

Different Accounting Practices Will Not Have an Impact on the Comparative