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When using financial ratios to analyze companies, it is important to take into consideration ______. (Check all that apply.)

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Tundexi

It is important to take into consideration the different accounting methods used (US GAAP or IFRS) when using financial ratios to analyze companies,

Financial ratio refers to comparison of two numerical values taken from an company's financial statements.

  • The Financial ratio are used to evaluate the overall financial condition of a firm or organization.

  • The GAAP means generally accepted accounting principles and tends to be more rules-based while IFRS means International Financial Reporting Standards and tends to be more principles-based.

  • The use of either GAAP and IFRS can affect the accuracy of the financial ratio

Therefore,  It is important to take into consideration the different accounting methods used (US GAAP or IFRS) when using financial ratios to analyze companies,

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