Discuss the Limitations of Ratio Analysis and the Cautions Which

question 145

Essay

Discuss the limitations of ratio analysis and the cautions which must be taken when reviewing a cross-sectional and time-series analysis.

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Definitions:

Pecuniary

Relating to or consisting of money.

Sales Commission

A fee paid to sales personnel, often calculated as a percentage of the sales they generate.

Income Tax

A tax imposed by a government on the financial income generated by individuals or entities within its jurisdiction.

Plant Capacity

The maximum level of output that a company can sustain to produce in a given period under normal conditions.