Which of the following is NOT a limitation related to the usage of ratios when reviewing a firm's performance?
A)Many firms experience seasonality in their operations.
B)Ratios cannot be used to compare firms that are in the same industry if one firm's sales are higher than another firm's.
C)Some firms operate in a variety of business lines,which makes it difficult to make comparisons.
D)Accounting practices differ widely among firms.

Question

Quizplus · Accepted Answer

Ratios can still be used to compare firms in the same industry with different sales levels, as long as other relevant factors are taken into consideration. The other options present legitimate limitations related to the usage of ratios when reviewing a firm's performance, such as seasonality, diverse business lines, and accounting practices.

Which of the Following Is NOT a Limitation Related to the Usage