Critical Analysis of Limitations of Financial Reporting

Financial statements are significant sources of information for business or company which help managers and investors to make a decision. The information provided helps the company to position itself in the market by leveraging the weaknesses and boosting the strength while making inferences on the financial capacity of the company. Managers make impactful investment decisions using the information derived from the financial statements. Accounting estimates can differ due to inflation, nature of the asset, analyst involved, and time (Sacer, Malis, and Pavic, 2016, 405). As such, financial limitations can lead to subjective judgments especially when accounting estimates, revenues or expense deteriorating, and intangible surge issues emerge.