A financial analyst is comparing two companies.Which of the following would cause major problems in the evaluation process?
A)One company has a fiscal year that ends on October 31,while the other company has a fiscal year that ends on August 31.
B)One company reported nonoperating activities,while the other company did not.
C)The companies operate in different industries.
D)Inflation has been low for the past several years.

Question

Quizplus · Accepted Answer

Comparing companies from different industries can cause major problems in the evaluation process because industries have different growth prospects, risks, and financial characteristics. This makes it difficult to make direct comparisons between the financial health and performance of the companies.

A Financial Analyst Is Comparing Two Companies