Limitations of Ratios:

Have you ever thought the financial world backbone that indicates so many strategy of investment has limitations that needs to be understood by People at large?
A simple Current Ratio or even Debt to Equity (Net worth) Ratio has different interpretation. For instance: Theoretically, A high current ratio indicates CA > CL by that many times its benefits can be read in all of the books or a CR <1 indicates short term liquidity crunch for the company.
HLL Hindustan Lever now known as HUL maintains a higher current liability than its current assets meaning it has got few of its fixed assets financed by the Current liabilities than the big question is how it manages its cycle so well.
A debt equity ratio of 2:1 theoretically says fine for the company, what about banking, and financial institutions. Forget that it’s a business specific thingy agreed what about companies in real estate space offering paper to lenders. Still one goes out and buy the stock of the company.
Ratio of PE 6 and PEG of 0.5 seems expensive but a stock at a PE of 12 and PEG of 0.8 still looks attractive. Think about it before we answer.