Retrospective Nature - Based on previous performance and therefore not necessarily useful for forward projections.
Different accounting policies - business may change its accounting policies from the previous year and therefore makes it more difficult to complete and less comparable.
External factors - ignore external factors, eg state of the economy or natural disaster or recession.
Ratios are most useful when they are used to compare performance against another comparable business and an industry - this information isnt always available and no 2 businesses are fully comparable as they are always differences
Ratios can be very misleading and easily 'massaged' to make the figures look more attractive. For example, many businesses delay payments to trade creditors at the end of the financial year to make the cash balance higher than normal and the creditor days figure higher too. Dont also explain what caused it, eg was it lower selling price or cost of sales.
Ratios dont take into account any non financial factors, product quality, customer service, employee morale, etc
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