Limitations of Financial Statements

Limitations of financial statements

Financial statements provide financial statistics of past events; but they are not forward looking.

They don’t provide key non-financial information like quality of revenues, types of customers and risk factors.

Certain qualitative elements are not considered in the financial statements terms like the quality and reputation of the management team and employees because they are incapable of being measured in monetary terms.

The figures provided in financial statements can’t be attributed to future since future earnings depend on many more factors like local and global market conditions, inflation etc.

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Mohan Bhupathiraju

Mohan Bhupathiraju is a co-founder & editor at LastBull.com. Handled multiple projects in BFSI for few of the Forbes top 100 companies. He works in IT industry in the US. Presently working on start up Ideas in Finance & Technology niches.

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