A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be comparable.

Question

Quizplus · Accepted Answer

Companies within the same industry may vary in terms of size, market segment, product/service offerings, geographic locations, financial structures, and other factors that impact financial performance. Therefore, using industry norms to evaluate financial performance may not provide an accurate picture of how well a particular company is doing relative to its peers.

A Limitation of Using Industry Norms in Financial Performance Evaluation