This connects back to why financial statement analysis matters in the first place. Investors use things like profitability and other financial ratios to judge a company's performance. If the underlying numbers are wrong, the ratios calculated from them can also be misleading and cause investors to make poor decisions. The lecture describes ratio analysis as using financial ratios to assess company performance and identify areas that need improvement.

This stood out to me because our lecture explained that finance professionals use financial statements to make inferences about a company's future. If the information being reported is inaccurate, investors could make decisions based on a completely false picture of the company's performance.