Question 1:............ (5 marks) The preparation and analysis of comparative balance sheets and income statements are commonly applied tools of financial statement analysis and interpretation Required: Discuss the inherent limitations of analyzing and interpreting financial statements for a single year. Include in your discussion the extent that these limitations are overcome by use of comparative financial statements computed over more than one year. Question 2:.. (8 marks) Jordan Friendly Bookstore has experienced rapid growth since its formation in 2015. Following is selected data from its annual report Sales Cost of Sales Net Profit Total Assets Number of Books Sold 2019 2018 2017 2016 2015 $1,500,000 $1,260,000 $970,000 $840,000 $600,000 1,008,000 971,000 598,000 515,000 360,000 60,000 53,000 46,000 39,000 30,000 1,489,000 1,100,000 897,000 768,000 545,000 97,500 85,703 73,192 63,200 45.187 Required: a. Perform a horizontal analysis of the data given, using 2015 as the base year. b. Comment on the results. Question (6 marks) The following are simplified, vertical, common-size balance sheets for three firms-a retailer, a service firm, and a manufacturer. Assets Firm A Firm B Firm C Cash Receivables Inventory Total Current Assets Plant, Property, and Equipment (net) Investments Total Assets 6.1% 23.2 31.1 60.4 30.3 9.3 100.0% 8.1% 4.4 1.5 14.0 83.4 2.6 100.0% 8.7% 12.1 24.5 45.3 51.8 2.9 100.0% 11.5% 21.6% 18.1 Liabilities and Stockholders' Equity Total Current Liabilities 29.3% Long-Term Debt 24.8 37.8 Total Stockholders' Equity 63.7 Total Liabilities and Stockholders' Equity 100.0% 100.0% 100.0% Required: Match the statements to the type of firm and explain your choice. 52.6 40.6