In 600 words (300 each) answer the following questions and also provide citation and references to justify your answers.

Q1. Explain the purpose of the three major financial statements (i.e. the statement of cash flows, the income statement and the statement of financial position) and discuss how together they provide an overview of the financial health of a firm (10 marks).

Q2. Ratio analysis is a widely used technique for evaluating the financial performance and stability of a business. However, there are many limitations to ratio analysis. Discuss the main limitations below (10 marks).