Answer the following questions:

1. What are the names and definitions (how they are calculated) of three traditional financial ratios based on balance sheet used to measure liquidity? Explain if their use is appropriate to measure all parts of the working capital too. Is there any common disadvantage of these three ratios? (10%)
2. Theory supports that the liquidity of a company is related with the cash flow statement. Explain how. (10%)
3. Discuss the relationship between the parts of the working capital and the cash flow statement and then, with the balance sheet. (5%)

(your answer on subject 2 should not exceed 350 words)