The Following Information Is Based on the Financial Statements of Oscar

question 66

Essay

The following information is based on the financial statements of Oscar Distributing Ltd., which has a December 31 year end: Return on equity, 2020 ........................................... 8.1 %
Return on equity, 2021 ........................................... 8.4 %
Profit margin, 2020 ................................................ 10.1 %
Profit margin, 2021 ................................................ 10.3 %
Debt to assets ratio, 2020 ....................................... 3:5
Debt to assets ratio, 2021 ....................................... 1:2
Current ratio, 2020. ................................................ 1.8:1
Current ratio, 2021. ................................................ 2: 1 Other events that recently occurred at Oscar's:
-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.
-In February 2022, a major spill from Oscar's heating fuel tanks damaged the fruit trees of a commercial orchard next door to Oscar's warehouse.
Instructions
Using the information about Oscar Distributing Ltd., explain how use of ratio analysis alone may not lead to the optimum investment decision.

---

Definitions:

Family Activeness

The level of physical and social activities that members of a family engage in together.

Fast Food

A type of mass-produced food designed for commercial resale, characterized by its quick preparation and serving, often lacking nutritional value.

ADHD

Attention Deficit Hyperactivity Disorder is a long-term condition characterized by difficulties in focusing, excessive activity, and impulsive behaviors.

Impulsiveness

A trait characterized by acting on whims or desires without considering the consequences, often leading to premature or risky behaviors.