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6 pts Although financial statement analysis can provide useful information about a company's operations and its financial condition, this type of analysis does have some potential problems and limitations and it must be used with care and judgment. Select which of the answers below accurately highlight some of the problems and limitations of financial statement analysis Financial statements are from a historical perspective therefore, financial statement analysis evaluating past performance while managers real interest in the future It is difficult to generalize about whether a particular ratio is good or bad. For example, agh current ratio might indicate a strong bodily position which is good receive cash, which is bad, becaut cruce bank is a non-earning asset. Similarly, a high foed sturnover ratio can occur either because a firmes is met dicery or because it is undertailed and simply cannot afford to buy meghus Afrm might have someration that look good and others that look "bad" so making it difficult to tell whether the company is, on balance, ha strong or a weak position. Therefore, franca de ne Different operating and accounting practices can distort comparisons. Inventory valuation and depreciation methods can affect the financial statements and thus ditest comparison of the use frescounting procedures. Also, if one firmemes a substantial amount of its productive equipment, then it might show relatively few assets in comparison to its sole because based assets often do not on the balance sheet te same time, the lease liability might not be shown as a debt. Thus, leasing can artificially improve both the debt and turnover ratios Firms can employ window dressing techniques to make their financial statements look better to credit analysts. To llustrate a Chicago builded closed on a fan on December 29, 2019, held the proceeds of the loc a few days, and then paid off the loan a few days later on January 6, 2020. This improved his current and quick rates and made his year-end 2019 balance sheet food. However, the improvement was terper week later the balance sheet was back at the old level Inflation distorts firms balance sheets. Further, because inflation affects both depreciation charges and Inventory couts profits also are lected. Thus, arato analysis for one from over time, oracowaniem different ages, must be interpreted with care and judgment Many large forms operate a number of different divisions in quite different industries, and in such cases the difficult to develop a meaningful set of industry averages for comparative purposes. This tends to make a wish more useful for small, wly-focused forms than for large, multi-divisional ones. Seasonal factors can also distort ratio analysis. For example, the inventory turnover ratio for a food processor will be radical diferent if the balance sheet revied for inventore is the one before the ones after the carining session. This problem can be minimized by using monthly everages for inventories when calculating ratios such as turnover 6 pts Although financial statement analysis can provide useful information about a company's operations and its financial condition, this type of analysis does have some potential problems and limitations and it must be used with care and judgment. Select which of the answers below accurately highlight some of the problems and limitations of financial statement analysis Financial statements are from a historical perspective therefore, financial statement analysis evaluating past performance while managers real interest in the future It is difficult to generalize about whether a particular ratio is good or bad. For example, agh current ratio might indicate a strong bodily position which is good receive cash, which is bad, becaut cruce bank is a non-earning asset. Similarly, a high foed sturnover ratio can occur either because a firmes is met dicery or because it is undertailed and simply cannot afford to buy meghus Afrm might have someration that look good and others that look "bad" so making it difficult to tell whether the company is, on balance, ha strong or a weak position. Therefore, franca de ne Different operating and accounting practices can distort comparisons. Inventory valuation and depreciation methods can affect the financial statements and thus ditest comparison of the use frescounting procedures. Also, if one firmemes a substantial amount of its productive equipment, then it might show relatively few assets in comparison to its sole because based assets often do not on the balance sheet te same time, the lease liability might not be shown as a debt. Thus, leasing can artificially improve both the debt and turnover ratios Firms can employ window dressing techniques to make their financial statements look better to credit analysts. To llustrate a Chicago builded closed on a fan on December 29, 2019, held the proceeds of the loc a few days, and then paid off the loan a few days later on January 6, 2020. This improved his current and quick rates and made his year-end 2019 balance sheet food. However, the improvement was terper week later the balance sheet was back at the old level Inflation distorts firms balance sheets. Further, because inflation affects both depreciation charges and Inventory couts profits also are lected. Thus, arato analysis for one from over time, oracowaniem different ages, must be interpreted with care and judgment Many large forms operate a number of different divisions in quite different industries, and in such cases the difficult to develop a meaningful set of industry averages for comparative purposes. This tends to make a wish more useful for small, wly-focused forms than for large, multi-divisional ones. Seasonal factors can also distort ratio analysis. For example, the inventory turnover ratio for a food processor will be radical diferent if the balance sheet revied for inventore is the one before the ones after the carining session. This problem can be minimized by using monthly everages for inventories when calculating ratios such as turnover