What are some accurate statements regarding financial analysis?

Financial analysis typically disregards fluctuations in price levels

Financial analysis serves as a valuable tool for evaluating a company's financial strengths and weaknesses. However, it heavily relies on the data presented in financial statements, which inherently come with limitations. Consequently, analysts should remain mindful of various factors that can affect the accuracy and completeness of financial analysis. These limitations encompass considerations such as the impact of price level fluctuations, the potential manipulation of financial statements for cosmetic purposes, alterations in a company's accounting practices, adherence to accounting principles and conventions, subjective judgments, and more. Beyond these factors, additional limitations of financial analysis include:
* Neglecting to account for changes in price levels.
* The potential for misinterpretation without insight into a company's accounting methods.
* Viewing financial analysis primarily as a review of corporate reports.
* Focusing predominantly on monetary data, often at the expense of non-monetary aspects.
* The inherent constraint of financial statements, which may not always reflect the current financial position of the company due to the influence of accounting concepts and conventions.