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Options
- A
Provides insights into liquidity, profitability, and solvency
- B
Easy to calculate from financial statements
-
Relies heavily on historical data
Correct answer
- D
Helps in comparing performance over time
Why this is the answer
While ratio analysis is useful for financial evaluation and comparison, it primarily relies on historical financial statements, which may not reflect future conditions. It also ignores qualitative factors like market dynamics or management quality. Options A, B, and D are advantages, not limitations.
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