Page 48 - CFA Lecture Day 8 Slides
P. 48
Session Unit 7:
25. Understanding Balance Sheets
LOS 25.h: Calculate and interpret liquidity and solvency ratios., p. 94
tanties
Analysts must understand the limitations of balance sheet ratio analysis:
• Comparisons with peer firms are limited by differences in accounting standards and
estimates.
• Lack of homogeneity as many firms operate in different industries.
• Interpretation of ratios requires significant judgment.
• Balance sheet data are only measured at a single point in time.
