Explain Five (5) limitations of financial ratios.

Expert Solution

Summary - The Ratios end up nothing but window dressing. The ratios ignore the price level change due to inflation. Many ratios are calculated using historical cost approach and they overlook the changes in price level between the periods this does not reflect the correct financial situation.

jeff jeffy answered 8 months ago

What are some uses and limitations of financial ratios?

Discuss financial ratios for the purpose of financial analysis: •mention uses and limitations •choose three ratios...

Discuss financial ratios for the purpose of financial analysis: •mention uses and limitations •choose three ratios from different categories (such as liquidity, asset management, debt management, profitability, etc.)

1. What is the system of internal controls? 2. Explain five (5) limitations of the Internal Control...

1. What is the system of internal controls? 2. Explain five (5) limitations of the Internal Control System? 3. Your audit plan notes that you will be testing the system of internal controls for the ‘three Es’. Explain the ‘three Es’ 4. Why should an auditor place reliance in internal controls

One of the limitations of the analysis of financial statements using financial ratios is that their interpretation may vary with changes in the economy.

One of the limitations of the analysis of financial statements using financial ratios is that their interpretation may vary with changes in the economy.Select one:to. Trueb. False

Explain the statement of financial position and its uses and limitations

List and explain 3 different financial ratios.

1.4 Explain Three limitations of financial statements, and Explain four characteristics of good financial statements?

Please explain the Use & Limitations of financial statements. 150 words

Justify and explain the financial performance of the company for each of the calculated financial ratios...

Justify and explain the financial performance of the company for each of the calculated financial ratios for the FY 2018 & 2019 (taken as average) : 1) AGE OF ACCOUNT RECEIVABLE = 23 DAYS 2) INVENTORY TURNOVER IN DAYS = 42 DAYS 3) CURRENT RATIO = 1.58 4) LIQUID RATIO = 0.56 5) RETURN ON ASSET = 1.93% 6) EQUITY RATIO = 0.55 7) RETURN ON EQUITY = 3.5% 8) NET PROFIT = 1.02%

(i) Explain five (5) qualitative characteristics of IFRS that is used to prepare financial statements to...

(i) Explain five (5) qualitative characteristics of IFRS that is used to prepare financial statements to your colleagues at the meeting. (ii) Explain the difference between profit and profitability. (iii) Explain the concept of going concern and the implication of revocation of going concern assumption when financial statements are prepared.

Question