Following are the main limitations of financial statement analysis :

1. Historical data: Financial accounts are prepared on the basis of past transactions, so we can say that financial statement is based on historical information. Based on analysis of financial statement, future of business entity can be forecasted. So, here estimation is possible which is biggest limitation.

2. Absence of qualitative aspect: Factors like honesty, expertise, contribution of workers for development of business and loyalty of management towards business entity etc. are not considered which have relation with efficiency of business. This is again a limitation.

3. Window dressing: Many a time, the information disclosed in financial statement is not found to be correct. Accounts are prepared on the basis of incorrect information rather than correct information. Thus, decisions made by the stakeholders stand incorrect. This is also a limitation.

4. Absence of Qualitative Aspect: During financial statement analysis only quantifiable items are considered. But factors like contribution of workers for development of business and loyalty of management towards business entity, honesty, expertise etc. are ignored.

5. Personal opinion: There are options in accounting for preparing the accounts, i.e. Use of inventory valuation and depreciation method. Thus, there is a possibility of personal opinion. Due of these options, there is a room for subjectivity in preparation of accounts. This also creates hurdle to financial analysis.

6. Based on presentation of financial statements: There is a direct relation between true and fair information and effective and efficient analysis shown in financial statements. Thus if information is incorrect or inadequate true and fair analysis of information can not be done.