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Discuss general limitations of financial statement analysis

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Reference no: EM133155697

Question - The following information has been extracted from the financial statements and notes of Pandana Fashions Ltd.

2021

2020

Sales revenue

$580,000

$575,000

Interest expense

$23,000

$26,500

Income tax expense

$44,600

$53,000

Profit

$52,500

$56,100

Dividends

$2,800

$2,800

Total assets

$540,000

$555,000

Total liabilities

$300,000

$330,000

Total equities

$240,000

$225,000

Required -

A. Calculate the following ratios for 2020 and 2021:

(1) profit margin

(2) return on assets (ROA)

(3) return on equity (ROE)

B. Analyse the company's profitability.

C. Discuss the general limitations of financial statement analysis.

Reference no: EM133155697

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