The following information is based on the financial statements of Floyd Distributing Ltd., which has a December 31, year end: Other events that recently occurred at Floyd's:
$\bullet$Five out of six members of the board of directors resigned. Four of these individuals have launched a lawsuit on behalf of shareholders in an attempt to terminate the employment of senior management.
$\bullet$In February 2015, a major spill from Floyd's heating fuel tanks damaged the fruit trees of a commercial orchard next door to Floyd's warehouse.
Instructions
Using the information about Floyd Distributing Ltd., explain how use of ratio analysis alone may not lead to the optimum investment decision.

Question

The following information is based on the financial statements of Floyd Distributing Ltd., which has a December 31, year end:  Other events that recently occurred at Floyd's:
$\bullet$Five out of six members of the board of directors resigned. Four of these individuals have launched a lawsuit on behalf of shareholders in an attempt to terminate the employment of senior management.
$\bullet$In February 2015, a major spill from Floyd's heating fuel tanks damaged the fruit trees of a commercial orchard next door to Floyd's warehouse.
Instructions
Using the information about Floyd Distributing Ltd., explain how use of ratio analysis alone may not lead to the optimum investment decision.

Quizplus · Accepted Answer

The Answer of The following information is based on the financial statements of Floyd Distributing Ltd., which has a December 31, year end:  Other events that recently occurred at Floyd's:
$\bullet$Five out of six members of the board of directors resigned. Four of these individuals have launched a lawsuit on behalf of shareholders in an attempt to terminate the employment of senior management.
$\bullet$In February 2015, a major spill from Floyd's heating fuel tanks damaged the fruit trees of a commercial orchard next door to Floyd's warehouse.
Instructions
Using the information about Floyd Distributing Ltd., explain how use of ratio analysis alone may not lead to the optimum investment decision.

The Following Information Is Based on the Financial Statements of Floyd