1.(a) Explain the advantages of using market capitalization as a measure of equity, and then, its drawbacks.

(b)Explain how looking at the ratio of total assets to total liabilities can mislead the analyst.

2.Describe how the careful study of financial statements can help raise warning flags regarding risk in merger and acquisitions have driven stock for stock transactions, and explain some examples of the need to watch for earnings discontinuities.

3.(a)Explain some of the ways that companies downplay expenses?

(b) What do most analysts do to benefit from the insights provided by the careful scrutiny of financial statements?