B describe uses and limitations of the balance sheet in financial analysis;

Question 1

Balance sheet uses

Answer 1

To assess liquidity, solvency, and ability to make distributions to shareholders

Question 2

Balance sheet Limitations

Answer 2

Elements can’t be interpreted as market value or intrinsic value, that is because many firms report many assets at say for example historical costs, or amortized costs, or fair value etc aka different and numerous valuation bases.

Also: A firms employee’s and reputation is not reported on the balance sheet.