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State any three limitations of Analysis of financial statement.

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Limitations of analysis of financial statements:

a. The analysis is done for past information, while the users are more concerned about current and future information.

b. It ignores the non-monetary transactions that are also very useful and relevant for decision-making.

c. Such analysis is subject to personal bias and judgement. The conclusions drawn from the financial statements are based on the ability and experience of the accountant.

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