Different measures of income such as net income and earnings before interest and taxes are used to calculate different financial ratios.

Name: Different measures of income such as net income and earnings before interest and taxes are used to calculate different financial ratios.
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Question

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Different financial ratios require different measures of income. For example, the debt-to-equity ratio typically uses earnings before interest and taxes, while the price-to-earnings ratio uses net income.

Different Measures of Income Such as Net Income and Earnings