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

 

 

   

9,00010,000

2,5002,500

2,0002,000

2,500

7,000

6,0004,0003,000

2,5002,000

2,0002,0003,000

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

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.