Financial Statement Analysis. As you noted in the chapter, there are C 3 common analytical techniques used to analyze a company's financial statements: 1) Horizontal Analysis 20 Vertical Analysis 3) Ratio Analysis Each technique can be used to assess the financial health and future prospects of a Company. The ratios that can be used fall into three categories: 1) Liquidity Ratios measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash. In your book on page 693 the liquidity ratios are from Working Capital down to and including Total Asset Turnover. 2) Profitability Ratios measure the income or operating success of an enterprise for a given period of time. In your book on page 693 the profitability ratios are from Gross Margin Percentage down to and including Book Value per Share 3) Solvency Ratios measure the ability of the enterprise to survive over a long period of time. In your book on page 693 the solvency ratios are Times Interest Earned, Debt-to-Equity ratio and Equity Multiplier. In the text the authors state that an analyst should not rely solely on financial statement analysis when evaluating a company? Do you agree or disagree? Why?