The Following Information Is Based on the Financial Statements of Floyd

question 21

Essay

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.