Which of the following statements is correct?
A)Peer group analysis is easier when a firm is a conglomerate rather than a single line of business.
B)Australian listed companies can only be compared to other companies listed on the ASX.
C)Peer group analysis is easier when firms have different fiscal years.
D)GICS are useful in identifying companies for comparison purposes but some care must be taken.
E)Peer-group analysis is simplified when firms use different depreciation methods.

Question

Quizplus · Accepted Answer

GICS (Global Industry Classification Standard) is a widely recognized system for organizing companies into sectors and subsectors, making it useful for identifying peer companies for comparison purposes. However, care must be taken as some companies may have operations that span multiple sectors or may not fit neatly into a single subsector. The other statements are incorrect: peer group analysis is generally easier when firms are in the same line of business rather than in diverse conglomerates (A); there are international comparables that can be used for Australian listed companies (B); comparing firms with different fiscal years can make peer group analysis more difficult (C); and using different depreciation methods can make peer group analysis more complex (E).

Which of the Following Statements Is Correct