New Horizontal Limited Balance Sheet as at 31st December 2016 ($,000)

Share Capital 450

Retained Profits 240

690

12% Debentures 700

Trade Creditors 620

Proposed Dividends 45

Fixed Assets net of Depreciation 875

Stocks 310

Debtors 770

Bank Balance 100

2,055

New Horizontal Limited Profit and Loss Account for Year Ended 31 December 2016 ( Extract) ($,000) Sales 3,100,000 Gross Profit 1,725,000 expenses 805,000 Depreciation 250,000 (c) Explain two (2) limitations of ratio analysis? (2 mks)