Question

RElying on absolute values in an entity financial statement to predict because?

Answer 1

Relying on absolute values in an entity's financial statements to predict future risks is not meaningful because there is an an emphasis on the need to express the reported number in relation to other numbers, so that the financial statements can be compared and the financial statements to tell a story about the entity’s financial health

An increase in the profit figure does not necessarily indicate an increase in the profitability of the entity

An increase in non-current liabilities does not necessarily mean the entity has become more reliable on external funding.

An increase in current liabilities does not necessarily mean the entity is having liquidity problems.