Why is it generally inappropriate to compare
debt-to-equity or interest coverage of companies from different industry
classifications?

Question

Answer

Companies in different industries are required to use
different accounting standards.

Answer

Different industries typically follow different
capital structures and debt-servicing practices, making ratio comparisons
misleading without context.

Answer

Companies in different industries often use different
currencies, which distorts ratios.

Answer

All companies use similar debt levels, so comparing
ratios does not provide additional insights.

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