Accounting Methods and Principles
Financial ratios may not be directly comparable between companies that use different accounting methods or follow various standard accounting practices. Most public companies are required by law to use generally accepted accounting principles for their home countries, but private companies, partnerships and sole proprietorships may not use accrual basis accounting. Large multi-national corporations may use International Financial Reporting Standards to produce their financial statements, or they may use the generally accepted accounting principles of their home country.
There is no international standard for calculating the summary data presented in all financial statements, and the terminology is not always consistent between companies, industries, countries and time periods.
Read more about this topic: Financial Ratio
Famous quotes containing the words accounting, methods and/or principles:
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—Karl Liebknecht (1871–1919)
“The comparison between Coleridge and Johnson is obvious in so far as each held sway chiefly by the power of his tongue. The difference between their methods is so marked that it is tempting, but also unnecessary, to judge one to be inferior to the other. Johnson was robust, combative, and concrete; Coleridge was the opposite. The contrast was perhaps in his mind when he said of Johnson: “his bow-wow manner must have had a good deal to do with the effect produced.””
—Virginia Woolf (1882–1941)
“Indigenous to Minnesota, and almost completely ignored by its people, are the stark, unornamented, functional clusters of concrete—Minnesota’s grain elevators. These may be said to express unconsciously all the principles of modernism, being built for use only, with little regard for the tenets of esthetic design.”
—Federal Writers’ Project Of The Wor, U.S. public relief program (1935-1943)