Question

Which of these statements is false? A company comparison should not be made with industry averages if the company does not clearly fit into any one industry. When using industry averages, it is often necessary to use an industry that the firm best fits. The analysis of an entity's financial statements can be more meaningful if the results are compared with industry averages and with results of competitors. Many companies will not clearly fit into any one industry. A financial service uses its best judgment as to which industry the firm best fits.

Answer 1

A company comparison should not be made with industry averages if the company does not clearly fit into any one industry.

Step-by-step explanation:

In Business management, it is important to note that many companies will not clearly fit into any one industry.

Hence, when using industry averages, it is often necessary to use an industry that the firm best fits rather than randomly picking up any industry. Additionally, the analysis of an organization's financial statements would be more meaningful if the results are compared with industry averages and with results of competitors.

Any financial service sought after, should use its best judgment by analyzing and identifying which industry the firm best fits.