2 short accounting questions

Just 2 or 3 sentence answers per question.  These are short questions.   Due tomorrow.  Thanks 🙂

 

 

 

 

 

Question #1

Ratios provide the users of financial statements with a great deal of information about the entity.  Do ratios tell the whole story?  How could liquidity ratios be used by investors to determine whether or not to invest in a company?    

 

 

 

 

 

Question #2

 

	Year Ending December 2012	Year Ending December 2011	Year Ending December 2010
Revenues	40,000	35,000	33,000
Operating Expenses
Salaries	15,000	10,000	9,000
Maintenance and Repairs	6,000	9,000	10,000
Rental Expense	2,500	2,500	2,500
Depreciation	2,000	2,000	2,000
Fuel	4,000	3,500	2,500
Total Operating Expenses	29,500	27,000	26,000
Operating Income	10,500	8,000	7,000
Sales and Administrative Expenses	6,000	4,000	3,000
Interest Expense	2,500	2,000	1,000
Net Income	2,000	2,000	3,000

Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012.  Calculate the profit margin  for each of these years.  Comment on the profit margin trend.