How can you be sure that you are comparing like with like when looking at different businesses?

and why is this important?

Answer #1

You need to look at the size of the business (It’s assets, how much cash it has, it’s liabilities), the nature of the business etc. Why it would be important would depend on what you are doing it for. If it is to buy a business surely you want to compare businesses so that you can get the best deal. If it is for something like ratio analysis you want to be able to compare the business to see which is performing better in simple terms.

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