Which of the following is a potential limitation of financial statement analysis?
A)Lack of comparability of firms in different industries
B)The impact of changing economic conditions
C)The impact of having more than one acceptable alternative accounting principle for accounting for a given transaction or economic event
D)All of these answers choices are correct.

Question

Quizplus · Accepted Answer

All of these answer choices are limitations of financial statement analysis. Lack of comparability of firms in different industries can make it difficult to compare financial ratios and other metrics. Changing economic conditions can impact a company's financial performance, making historical financial statements less useful for predicting future performance. Having more than one acceptable alternative accounting principle for accounting for a given transaction or economic event can lead to different financial statements for companies that have similar underlying economic events.

Which of the Following Is a Potential Limitation of Financial