Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:
Financial statements analysis can be useless because of which of the following reasons?
Options:
Cannot measure the profitability with accuracy
Cannot measure solvency
Lacks Qualitative Analysis
Cannot makes a comparative study
Correct Answer:
Lacks Qualitative Analysis
Explanation:
Financial Analysis of statements lacks qualitative analysis. If any item can not be measured in terms of money then it is not recorded which becomes a limitation. For e.g high quality goods, motivation of employees can not be recorded in books