BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Affected by window dressing
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Difficulty in forecasting
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Do not reflect changes in price level
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All of the Above
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Detailed explanation-1: -The limitation of financial analysis is that it is just a study of reports of the company. Hence, the correct answer is it is just a study of reports of the company.
Detailed explanation-2: -Some other limitations of financial analysis are mentioned below : The financial analysis does not contemplate cost price level changes. The financial analysis might be ambiguous without the prior knowledge of the changes in accounting procedure followed by an enterprise.
Detailed explanation-3: -Limitations of Financial Statement Analysis (a) Financial statements are historical in nature. (b) Financial statements do not show price level changes hence, affect the analysis also. (c) The results obtained by analysis of financial statements may be misleading due to window dressing.
Detailed explanation-4: -Which of the following is not a limitation of ‘Financial Statements Analysis’? It is affected by personal bias.