Comparability

Alright kiddo, let’s say your friend has a toy car and you want to compare it to your toy car. You need to look at things like size, color, and how fast it goes. If your toy car is smaller, a different color, or slower, it might not be a fair comparison. In the same way, when we compare things in business, we need to make sure they are comparable. That means we need to look at things like the size of the companies being compared, the time period being looked at, and the accounting methods used. Comparability helps us to make fair and accurate evaluations of things.