1. Past financial performance, good or bad, is not necessarily an accurate predictor of future performance.
2. Financial statements do not tell you about changes in senior management.
3. Financial statements do not tell you about the loss
of major customers.
4. Financial statements do not tell you about the competitive environment in which the
company operates.
5. Financial statements do not disclose the company’s future prospects, or the
results of its
expenditures on Research and Development.
6. The more out-of-date a customer financial statements are,
the
less reliable they are
as a
risk management tool.