Limitations of Ratio Analysis

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  • Limitations of Accounting Data
  • Ignores Price-level Changes
  • Ignore Qualitative or Non-monetary Aspects
  • Variations in Accounting Practices
  • Forecasting
  • Means and not the End
  • Lack of ability to resolve problems
  • Lack of standardised definitions
  • Lack of universally accepted standard levels
  • Ratios based on unrelated figures
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