Part 1.

Locate and read the following article located from the Library:

Faello, J. (2015). Understanding the limitations of financial ratios. Academy of Accounting & Financial Studies Journal, 19(3), 75-85.

Refer to pages 75 and 76 of Faello's (2015) work. In four separate paragraphs (one for each question), summarize four of the benefits of financial analysis mentioned in the journal article. In one paragraph, describe which one of the four benefits you consider to be most significant.

Review the following financial data, then answer the questions below.

Income Statement and Balance Sheet Company X Income Statement FYE 2014 and 2015 Period Ending 31-Jan-15 31-Jan-14 Total Sales $ 485,651,000 $ 476,294,000 Cost of Goods 365,086,000 358,069,000 Gross Profit 120,565,000 118,225,000 Selling General and Administrative 93,418,000 91,353,000 Operating Profit 27, 147,000 26, 872,000 Total Other Income/Expenses Net 113,000 119,000 Earnings Before Interest And Taxes 27,034,000 26,753,000 Interest Expense 2, 461,000 2,335, 000 Income Before Tax 24,573,000 24,418,000 Income Tax Expense 7,985,000 8, 105,000 Net Income From Continuing Ops 16, 588,000 16,313,000 Discontinued Operations 285,000 144,000 Net Income (Net Profit) $ 16,303,000 $ 16, 169,000 14,000,000 shares outstanding Market Share price per share | $ 10.00 $ 9.00 Company X Balance Sheet FYE 2014 and 2015 Period Ending 31-Jan-15 31-Jan-14 Assets Current Assets Cash Equivalents $ 9, 135,000 $ 7,281,000 Net Receivables 6,778,000 6,677,000 Inventory 45, 141,000 44,858,000 Other Current Assets 2,224,000 2,369,000 Total Current Assets 63,278,000 61, 185,000 Property Plant and Equipment 116,655,000 117,907,000 Goodwill 18, 102,000 19,510,000 Other Assets 5,671,000 6, 149,000 Total Asset 203,706,000 204,751,000 Liabilities Current Liabilities Accounts Payable 58,583,000 57, 174,000 Short/Current Long Term Debt 6,689,000 12,082,000 Other Current Liabilities $9,000 Total Current Liabilities 65,272,000 69,345,000 Long Term Debt 43,692,000 44,559,000 Deferred Long Term Liability Charges 8,805,000 8,017,000 Minority Interest 1,543,000 5,084,000 Total Liabilities 122,312,000 127,005,000 Miscellaneous Stocks Options Warrants Common Stock 323,000 323,000 Retained Earnings 85,777,000 76,566,000 Capital Surplus 2,462,000 2,362,000 Other Stockholders Equity -7, 168,000 -1,505,000 Total Stockholders' Equity 81,394,00 77,746,000 Total Liabilities + Stockholders' Equity $ 203, 706,000 $ 204,751,000 Number of Shares Outstanding 14,000,000 14,000,000 Market Share price per share | $ 10.00 9.00