Discuss at least three potential issues in utilizing ratio analysis that you would share with your colleague.

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1. Information Gaps: Ratio analysis does not always provide a full picture of an organization’s performance due to the possibility of incomplete data or certain key information being omitted. Therefore, it is important to identify and address any potential gaps in information before relying solely on ratios for decision-making.
2. Reliability: Ratios are calculated based on historical trade data and therefore they may not be reliable indicators of future performance. This means that organizations should take care when interpreting the results from ratio analysis and factor in external factors such as market volatility when making decisions.
3. Comparison Difficulties: It can be difficult to compare ratios between different companies since their respective accounting methods may be different or incomparable in some cases. Therefore, organizations should rely on more comprehensive comparative analysis techniques rather than just ratio comparison when attempting to make informed decisions about investing or partnerships with other companies.