Although financial statement analysis is highly useful tools, it has limitations also. The limitations involve the comparability of financial data between companies and the need to look beyond ratios.
Comparison of one company with another can provide valuable clues about the financial
health of an organization.
The analyst should keep in mind the
lack of comparability of the
data
before drawing any definite conclusion. Comparisons of key ratios with other companies and with industry
average often suggest avenues for further investigation.