Ans. While ratio analysis is a useful tool, it has certain limitations. It relies heavily on financial data, which may not capture the complete picture of a company's performance. Ratios are also highly influenced by accounting policies and can be manipulated. Additionally, ratio analysis does not consider external factors such as industry trends, economic conditions, or market competition, which can impact a company's performance. Therefore, it is important to consider these limitations and use ratio analysis as one of several tools for decision making.