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:
“I, who am king of the matter I treat, and who owe an accounting for it to no one, do not for all that believe myself in all I write. I often hazard sallies of my mind which I mistrust.”
—Michel de Montaigne (1533–1592)
“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)
“I am not one of those who have the least anxiety about the triumph of the principles I have stood for. I have seen fools resist Providence before, and I have seen their destruction, as will come upon these again, utter destruction and contempt. That we shall prevail is as sure as that God reigns.”
—Woodrow Wilson (1856–1924)