Describe the limitations of ratio analysis.
Jessica Madison has been working as an accounting intern for ABC for the past 3 years. Jessica has recently completed her BA degree and aspires to become a financial analyst at ABC. You have agreed to set aside a time each week to help Jessica become more familiar with various investment management fundamentals.
Explain the following to Jessica:
- How does ratio analysis serve as an effective tool to assess the current and future financial status of firms? Describe the limitations of ratio analysis.
- Explain the odd-lot theory and how it acts as a market predictor.
- How does a fundamental type of analysis, such as ratio analysis, differ from a technical analysis?
400-600 words
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APA
635 words