Purchase Solution

Limitations ratio analysis: cross-sectional, time-series

Not what you're looking for?

Ask Custom Question

Discuss the limitations of ratio analysis and the cautions which must be taken when reviewing a cross-sectional and time-series analysis.

Purchase this Solution
Solution Summary

Your discussion is 251 words and mentioned four major limitations.

Solution Preview

Cross sectional analysis, looking at current period for multiple firms or areas of the business,

Ratios use financial statement data and those data can have misleading distortions such as one-time events and changes to the product mix. They are also summaries and so diverse actions can offset and not trigger an unusual ratio amount. For instance, one segment of the business can be ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Sterling Company's financial ratios for the most recent year

    The 2009 ratio is compared to the industry (cross sectional) and to the prior two years (time series) with a paragraph for each ratio category.

  • Martin Manufacturing liquidity, activity, debt, profit

    Analyze the firm's current financial position from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm's liquidity, activity, debt, profitability, and market. Please see the attached document.

  • Ratio analysis techniques: which is not an accepted techniqu

    240154 Ratio Analysis Techniques Which of the following is not one of the accepted ratio analysis techniques: a Trend analysis b Boolean analysis c Cross-sectional analysis d Industry comparables analysis Please give me a brief explanation

  • Financial Statements and Ratio Analysis

    Cross-sectional ratio analysis: Use the financial statements on Fox Manufacturing Company for the year ended December 31, 2009, along with the industry average ratios to: a.

  • Factors Needed to Conduct a Longitudinal Data Analysis

    On the other hand, a cross-sectional study is done with all of a population at a specific point in time. This removes the ability to study your specific subject over time and be able to predict a causal relationship with that specific person.

  • Financial Statement Analysis, Flexible Budget

    Should it be time-series (horizontal) analysis or cross-sectional (vertical) analysis? Potential problems and limitations of financial statement analysis: ?

  • Regression Analysis

    363501 Statistics: Cross sectional data, time series data; priori hypothesis See attached file.

  • Unemployment Rate Regression Analysis

    I assume that by "during construction" you mean the unemployment rate at this time. This would be time series data, as opposed to cross sectional. Time series data are acquired over a period of time, for example on a monthly basis.

  • Cross-sectional and Quasi-experimental designs

    576686 Cross-sectional and Quasi-experimental designs I am having trouble finding the strengths and limitations of Cross-Sectional and Quasi-Experimental Designs. Please help explain its limitations and weaknesses.

View More Related Solutions