#1: Financial information is always historic. Sometimes history is a poor predictor of the future. It's important to bear in mind that trends, ratios, etc. may change over time.
#2: Because you may need to estimate amounts, financial information may be inaccurate. It's almost impossible to have 100% accurate information in your financial statements – it may be useful to double check information from different sources.
#3: Trends will only become apparent over time. In some cases it's tempting to see a trend in your analysis that could really be a random occurrence. Try to allow sufficient time before calling something a trend, says the Practical Accountancy Loose Leaf Service.
Now that you know limitations you must bear in mind, let's take a look at the financial analysis tools you can use:
The financial analysis tools you'll need fall into three categories:
Check out this article. It explains in great detail how to use these financial analysis tools.
There you have it: Keep these limitations in mind when it comes to financial statement analysis and try to overcome them where you can.