The financial statements of Mackay Corporation show the following information: 

Instructions 

a. Using horizontal analysis, analyze Mackay Corporation's change in liquidity, solvency, and profitability in 2020. Round to one decimal place. 

b. Using vertical analysis, analyze Mackay Corporation's decline in net income in 2020. Round to one decimal place. 

c. Which profitability ratios are obtained from the vertical analysis performed in part (b)? Is profitability improving or deteriorating based on these ratios? 

d. Referring to the research study mentioned in this chapter (in the section “Limitations of Financial Statement Analysis”), discuss some limitations of the financial statement analysis done in parts (a) and (b).

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Mackay Corporation Statement of Financial Position December 31, 2020 Assets 2020 2019 Cash $ 285,000 $ 292,000 Accounts receivable 142,000 181,000 Fair value through net income investments 133,000 132,000 Inventory 355,000 401,000 Plant assets (net) 442,000 465,000 Intangible assets 113,000 143,000 $1,470,000 $1,614,000 Liabilities and Equity 2020 2019 Accounts payable $ 267,000 $ 337,000 Long-term debt Share capital Retained earnings 64,000 152,000 326,000 326,000 813,000 799,000 $1,470,000 $1,614,000