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Explain three potential issues in utilizing ratio analysis

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Reference no: EM131756728

Problem

As your text describes, ratio analysis is a common technique in financial analysis. One of your colleagues states that a thorough ratio analysis is all that is needed in considering the financial health of a company. Although you agree that ratio analysis is a helpful guide, there may be some potential pitfalls in ratio analysis.

Discuss at least three potential issues in utilizing ratio analysis that you would share with your colleague. In addition, calculate a liquidity, profitability, and efficiency ratio from your company to demonstrate your observations.

Develop a 200 - 300 word explanation supporting your findings.

Guided Response: Review several of your classmate's postings. Respond to at least two of your classmates by commenting on any potential issues in using ratio analysis that were new to you. You may also provide another issue that your classmate had not considered.

Reference no: EM131756728

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