What is the main limitation of financial analysis?

Do not reflect changes in price level Measures the profitability Cannot measure solvency None of the above

Do not reflect changes in price level

Limitations of financial analysis are: 1. Financial analysis does not consider price level changes. 2. Financial analysis may be misleading without the knowledge of the changes in accounting procedure followed by a firm. 3. Financial analysis is just a study of reports of the company. 4. Monetary information alone is considered in financial analysis while non-monetary aspects are ignored . 5. The financial statements are prepared on the basis of accounting concept, as such, it does not reflect the current position.