Kindly use the above financial statements to answer following questions - the first image should be the last.

Office expenses Insurance Donations Advertising Legal fees Cleaning and sundry Rent Bank interest and charges Entertainment Total Expenses Net Profit 10,468 19,991 4,500 14,517 2,500 3,600 40,240 68,250 1,500 $1,000,640 $527,287 The Head of Credit has requested that you perform the following preliminary analysis: Ratio analysis using the available financial statements (10 marks) Analyse the business performance on the basis of the financial statements, ratio analysis, "rules of thumbs" and a set of industry averages provided by the Head of Credit. Note that the industry averages provided are only for some ratios and hence not complete (10 marks) Some Industry Averages RATIO INDUSTRY AVERAGE Current ratio 2.0 times Total liabilities to Equity 1.5 times Return on equity 40.6% Return on assets 22.8% Average collections 32.3 days Inventory turnover 6.8 times Fixed assets to net worth 50% Based on your preliminary evaluation, state whether you are prepared to tentatively offer credit to this company, providing reasons for your position, stating any conditions you may have. (5 marks) Question 1 - Financial Statement Analysis The following comprise the balance sheets and income statements for Taylor's Distributors Limited; a local distribution company. Assets Cash Accounts Receivable Inventory Total Current Assets Land and Building Equipment Vehicles Total Fixed Asset Balance Sheet Taylor's Ltd As at 31 December 2019 $ Liabilities 40,000 Bank Overdraft 486,953 Accounts Payable 414,002 Accruals 940,955 Total Current Liabilities 377,600 133,321 Shareholders' equity 150,720 Retained earnings 688,641 Current earnings 338,949 203,767 138,169 680,885 20 421,404 527,287 TOTAL 1,629,596 TOTAL 1,629,596 Profit and Loss Accounts Taylor's Ltd For the Period Ended 31 December 2019 Net Sales Cost of Goods Sold Gross Profit $4,141,500 | 2,613,573 1,527,927 EXPENSES Salaries, wages and payroll costs Repairs and maintenance Licenses and taxes Depreciation Travel Utilities Overseas telephone Motor vehicle expenses $590,287 35,654 9,717 58,950 10,798 28,420 35,600 65,648 Office expenses Insurance Donations Advertising Legal fees Cleaning and sundry Rent Bank interest and charges Entertainment Total Expenses Net Profit 10,468 19,991 4,500 14,517 2,500 3,600 40,240 68,250 1,500 $1,000,640 $527,287 The Head of Credit has requested that you perform the following preliminary analysis: (10 Ratio analysis using the available financial statements marks) Analyse the business performance on the basis of the financial statements, ratio analysis, "rules of thumbs" and a set of industry averages provided by the Head of Credit. Note that the industry averages provided are only for some ratios and hence not complete (10 marks)