Which of these are limitations of financial analysis?
I. Use of historical data
II. Invalid comparisons
III. Ratio results often contain errors in calculations
IV. Historical cost financial reports are not adjusted for inflation
V. Non-quantitative factors are not considered
A) I, II, III and IV only
B) I, II, III and V only
C) I, II, IV and V only
D) I, II, III, IV and V

Question

Quizplus · Accepted Answer

Financial analysis is limited by the use of historical data, potential for invalid comparisons, lack of adjustment for inflation in historical cost reports, and the exclusion of non-quantitative factors. Errors in calculation are not inherently a limitation of financial analysis itself.

Which of These Are Limitations of Financial Analysis