Limitations of Ratio Analysis : Accounting Homework Help by Clas

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Visit *******classof1****/homework-help/accounting-homework-help/ for customized academic assistance in Acc...
Visit *******classof1****/homework-help/accounting-homework-help/ for customized academic assistance in Accounting Limitations of Ratio Analysis : The debt-equity ratio gives an indication of an enterprise's ability to sustain losses without jeopardizing the interests of creditors. This ratio is based only on information provided in the balance sheet. Although stockholders' equity serves as a buffer to protect the creditors' interests, it should be kept in mind that the earning prospects of the enterprise are also relevant in judging a firm's ability to survive the long run.