Determine why it is sometimes misleading to compare a company’s financial ratios with those of other firms that operate within the same industry.

Determine why it is sometimes misleading to compare a company’s financial ratios with those of other firms that operate within the same industry. Support your response with an example from your research.:Comparing financial ratios of companies within the same industry may be misleading becausesome companies may have investments in other industries that could distort the comparison. An example of this would be comparing Facebook and Twitter’s financial ratios.Different companies use different accounting techniques when preparing their financial statements. Companies use different accounting methods when computing their financial ratios. One company may be using First in First out method (FIFO) to value its inventory while another company may be using Last in First out method (LIFO) (Persons, 2011).