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Tnromo Statomont for Vaar Fndad norombor 21 jnj1 (millinne of Anllarc) Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits? sales. Which specific accounts seem to be most out of line relative to other firms in the industry? IV. The accounts which seem to be most out of line include the following ratios: Current, EBITDA Coverage, Inventory Turnover, Days Sales Outstanding, and Return on Equity. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? I. It is more important to adjust the debt ratio than the inventory turnover ratio to account for any seasonal fluctuations. III. Rapid growth would most likely affect the coverage ratios, with little effect on asset management ratios. Seasonal sales patterns would not substantially affect your analysis. IV. Seasonal sales patterns would most likely affect the liquidity ratios, with little effect on asset management ratios. Rapid growth would not substantially affect your analysis. V. If the firm had sharp seasonal sales patterns, or if it grew rapidly during the year, many ratios would most likely be distorted. -Select- How might you correct for such potential problems? I. It is possible to correct for such problems by comparing the calculated ratios to the ratios of firms in a different line of business. II. It is possible to correct for such problems by comparing the calculated ratios to the ratios of firms in the same industry group over an extended period. III. There is no need to correct for these potential problems since you are comparing the calculated ratios to the ratios of firms in the same industry group. IV. It is possible to correct for such problems by insuring that all firms in the same industry group are using the same accounting techniques. V. It is possible to correct for such problems by using average rather than end-of-period financial statement information