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)
“We are lonesome animals. We spend all our life trying to be less lonesome. One of our ancient methods is to tell a story begging the listener to say—and to feel—”Yes, that’s the way it is, or at least that’s the way I feel it. You’re not as alone as you thought.””
—John Steinbeck (1902–1968)
“To abandon oneself to principles is really to die—and to die for an impossible love which is the contrary of love.”
—Albert Camus (1913–1960)