FRF7

Syllabus C3. Limitations Of Interpretation Techniques 3 / 4

a) Discuss the limitations in the use of ratio analysis for assessing corporate performance.[2]
b) Discuss the effect that changes in accounting policies or the use of different accounting polices between entities can have on the ability to interpret performance.[2]
c) Compare the usefulness of cash flow information with that of a statement of profit or loss or a statement of profit or loss and other comprehensive income.[2]
d) i) explain why the trend of eps may be a more accurate indicator of performance than a company’s profit trend and the importance of eps as a stock market indicator [2]
ii) discuss the limitations of using eps as a performance measure
Limitations Of Interpretation Techniques