there is no other information. that is it.

7. List and briefly discuss three (3) limitations of using ratios in financial analysis (also keep these in mind for your ratio analyses in the Written Company Analysis) Be specific. i. Many large firms operate different divisions in different industries. For these companies it is difficult to find a meaningful set of industry-average ratios. ii. Inflation may have badly distorted a company's balance sheet. In this case, profits will also be affected. iii. Seasonal factors can also distort ratio analysis. Understanding seasonal factors that affect a business can reduce the chance of misinterpretation. For example, a retailer's inventory may be high in the summer in preparation for the back-to-school season. As a result, the company's accounts payable will be high and its ROA low. iv. Different accounting practices can distort comparisons even within the same company (leasing versus buying equipment, LIFO versus FIFO, etc.). V. It is difficult to generalize about whether a ratio is good or not. A high cash ratio in a historically classified growth company may be interpreted as a good sign, but could also be seen as a sign that the company is no longer a growth company and should command lower valuations. vi. A company may have some good and some bad ratios, making it difficult to tell if it's a good or weak company. 7. List and briefly discuss three (3) limitations of using ratios in financial analysis (also keep these in mind for your ratio analyses in the Written Company Analysis) Be specific. i. Many large firms operate different divisions in different industries. For these companies it is difficult to find a meaningful set of industry-average ratios. ii. Inflation may have badly distorted a company's balance sheet. In this case, profits will also be affected. iii. Seasonal factors can also distort ratio analysis. Understanding seasonal factors that affect a business can reduce the chance of misinterpretation. For example, a retailer's inventory may be high in the summer in preparation for the back-to-school season. As a result, the company's accounts payable will be high and its ROA low. iv. Different accounting practices can distort comparisons even within the same company (leasing versus buying equipment, LIFO versus FIFO, etc.). V. It is difficult to generalize about whether a ratio is good or not. A high cash ratio in a historically classified growth company may be interpreted as a good sign, but could also be seen as a sign that the company is no longer a growth company and should command lower valuations. vi. A company may have some good and some bad ratios, making it difficult to tell if it's a good or weak company