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What are the variance conditions when ratio analysis cannot be an efficient method for prudent financial...

What are the variance conditions when ratio analysis cannot be an efficient method for prudent financial decision making?

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There are various variance variance conditions, when ratio analysis can not be an efficient method for prudent financial decision making.

1.Ratio analysis is a quantitative analysis method and not a qualitative analysis method , so it does not consider subjective information.

2. In Ratio analysis there is scope for  window dressing because the books of accounts of the company can be manipulated.

3. Ratio analysis is based on assumptions , different assumptions of different analyst make ratio analysis unrealiable and it may lead to variations.

4.Ratio analysis generally makes correlation between ratios of organizations but its inadequate because of difference in methods of accounting between organizations.

5.The exactness of ratio analysis may influence by contrains of financial proclamations.

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