Pete Hollingsworth is currently taking an accounting course and is confused about what his professor told the class about analyzing financial statements. Pete would like you to lead a study session on the topic. In order to help everyone out, you decide to write a short memo describing some of the key points.

Required 

Include the following items in your memo:

a. What is meant by trend analysis and how is it helpful?

b. How are common-size statements constructed and what are their uses?

c. What are a few common profitability, liquidity, and solvency ratios and how are they interpreted?

d. What are some limitations of financial statement analysis?