Define ratio analysis and its limitations
What can managers and investors learn from ratio analysis? What are the limitations of ratio analysis?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/define-ratio-analysis-and-its-limitations-jerc
... operations. Credit analysts (bankers and bondholders) analyze ratios to help judge a company's ability to pay its debts. Stock analysts (stakeholders) are mainly interested in a company's efficiency, risk, and growth prospects.
Referencing "Stakeholder Model 3 - Financial Ratios" within "Updates and Handouts." I will attempt the review the limitations of ratio analysis as it relates to investors.
Financial Ratios and Stakeholders
Stakeholders' primary focus is to evaluate a company from the perspective of the financial stakeholders - stockholders, bondholders, and bankers (stakeholder Model 3).
Income Statement: ...