Which of the Following Would Affect the Comparison of Financial

question 72

Multiple Choice

Which of the following would affect the comparison of financial statements across two different firms?

I. Different accounting principles
II. Different sizes of the companies
III. Different reporting periods
IV. Different industries

• A)I, III, and IV
• B)I and IV
• C)I and II
• D)I, II, III, and IV

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Definitions:

Times-Interest-Earned (TIE) Ratio

Determined by dividing earnings before interest and taxes by the interest charges. This ratio measures the extent to which operating income can decline before the firm is unable to meet its annual interest costs.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage, calculated as total liabilities divided by total assets.

Mark To Market

An accounting method that measures the fair value of accounts that can fluctuate over time, such as assets and liabilities.

Financial Ratios

Metrics used to evaluate a company's financial health, performance, profitability, and valuation.