Explanation : Financial ratio analysis is limited by the use of alternative accounting
methods. Accounting methods play an important role in the
interpretation of financial ratios. The lack of consistency across
companies makes comparability difficult to analyze and limits the
usefulness of ratio analysis.
Explanation : Financial ratios alone are not sufficient to determine the
creditworthiness of a company. Other factors must also be considered,
such as examining the entire operation of the company, meeting with
management, touring company facilities, and so forth.