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This is particularly the case if projects with different risk profiles were compared using the ROI methodology. The ROI value of the project with the higher risk should be reduced to account for the broader range of outcomes when compared with a project with lower risk. ROI calculations may over-value investments since the equation favors short-term savings and overlooks long-term costs such as maintenance, support, and software upgrades. This problem is the result of using a one-year time span in the standard ROI calculation to determine the value of the project. Therefore, projects having large costs in the future may incorrectly appear to give a higher return because the future costs are not included in the calculation.

The fact that ROI can be calculated several different ways creates a problem of consistency. Few companies have developed a single ROI methodology, thus making it difficult to accurately compare and evaluate the economic return of several projects. This problem is accentuated when comparing the value of software from multiple vendors, each of whom may have used a different methodology to arrive at the ROI for their particular software. Managers selecting a software vendor have the task of untangling the true ROI from each vendor, and creating a normalized, single view for comparison purposes.

Generally, aside the ROI, other measures of performance companies also have their inherent limitations and could therefore be inadequate in highlighting the stated performance. Usually, It is difficult to generalize about whether a particular ratio is ‘good’ or ‘bad’. For example a high current ratio may indicate a strong liquidity position, which is good or excessive cash which is bad. Similarly Non current assets turnover ratio may denote either a firm that uses its assets efficiently or one that is under capitalized and cannot afford to buy enough assets.

Secondly, through creative accounting some accounts of the company are adjusted therefore, ratio analysis can give false explanations to the users. The limitations in information problems are also there because ratios are not definitive measures, outdated information is presented in the financial statements, historical costs is not good for decision making, and ratios give general interpretations.

Another category of limitation is 'Comparison of performance over time'. These limitations are caused by ratio analysis because of price changes, technology changes, changes in accounting policy and impact of trading size. The choices of accounting policies may distort inter company comparisons. Example IAS 16 allows valuation of assets to be based on either revalued amount or at depreciated historical cost.

The business may opt not to revalue its asset because by doing so the depreciation charge is going to be high and will result in lower profit. Moreover, Ratios are based on financial statements which are summaries of the accounting records. Through the summarization some important information may be left out which could have been of relevance to the users of accounts. The ratios are based on the summarized year end information which may not be a true reflection of the overall year’s performance of the organization under consideration.