Mr. Harley finds it really difficult to use his company's financial statements as management tool for decision making. Accounting data collected over time is used by him to prepare the three financial statements viz. cash flow statement, Fund flow statement and common size statement takes the companys financial pulse in a different view.

a. Help Mr. Harley to interpret his balance sheet in a better way.

b.To what extend he can depend accounting ratios. Illustrate your answer.