Which of the following components would be best for you to include in your financial statement analysis?

A calculation of financial ratios and an evaluation of the comparative trends in the firm$$s financial position and performance over a certain time period

A critique of the company$$s financial statements and a report of any misprints to be sent to the Securities and Exchange Commission

There are several groups of ratios most decision makers and analysts use to examine different aspects of a company$$s performance. Based on the descriptions of ratios listed, identify the relevant category of ratios.

$$ Ratios that help determine whether a company can access its cash and pay its debts that mature in less than a year are called ratios.

$$ These ratios, which help determine how efficiently a firm is using its assets to generate sales are called ratios.

$$ Ratios that help assess a company$$s ability to service the interest and repayment obligations on its long$-$term debt and the degree to which it uses borrowed versus invested financial capital are called ratios.

$$ ratios help measure a company$$s ability to generate income and profits based on its invested capital.

$$ ratios examine the market value of a company$$s share price, its profits and cash dividends, and the book value of the firm$$s assets and relate them to other data items to determine how the firm is perceived in the stock market.

Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against itself over time and against other players within the industry.

However, like many tools and techniques, ratio analysis has a few limitations and weaknesses.

Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply.

A firm$$s ratios can lead to conflicting conclusions$$some ratios might be $$good$$ and some $$bad$.$

Inflation can distort balance sheet data.

Ratio analysis is conducted using benchmarking techniques.