Financial analysis is comprehensively beneficial in ascertaining the financial weaknesses and strengths of an enterprise, it is grounded on the data that is obtainable in financial statements. The 5 Limitations of Financial Analysis for Commerce Students are mentioned below.The financial analysis additionally goes by means of a number of limitations of financial statements. Therefore, the analyst must be aware of the effect of the cost price level changes, changes in accounting policies of an enterprise, window dressing of financial statements, personal judgment, accounting concepts, and conventions, etc., The following are the limitations of financial statements – dependence on historical costs.

Some other limitations of financial analysis for commerce college students are mentioned below :

• The financial evaluation doesn’t ponder value degree adjustments.
• The financial evaluation could be ambiguous without the prior information of the adjustments in the accounting process adopted by an enterprise.
• Financial evaluation is a examine of reviews of the enterprise
• Financial knowledge alone is contemplated in financial evaluation whereas non-monetary components are missed.
• The financial statements are outlined on the bottom of accounting idea, as such, it doesn’t mirror the present place