– How regulatory authorities mitigate financial ratio limitations?
In order to cut or overcome the shortcomings of financial statements creditors, investors and accountants have all developed different analytical techniques. For internal users of the corporation, especially managers, performance measures have played an important role in shorting the effects of these limitations. Analysts now use tools that are aided in valuing corporation’s performance further than financial outcome, putting factors like patents of leadership, human resources, specific work force into the picture. a lot of barriers have been removed because of the development of technology, especially to finance, as organizations today are also fulfillment financial information warehouses the use of which makes it easier for individuals and organizations make decisions that are reasonable. Furthermore, some organizations are also willingly disclosing information about their plans and strategy, the mainly keys for a success factor, supplements to their financial statements is their managerial objectives. This gives the creditors, investors, and other involved parties of financial statements more of a thought of what the company is about and where is it going to stand in the future.