Pigment Manufacturers (Pty) Limited (Pigment) is a company that produces industrial paints. Since the beginning of 2XX4, the products have been marketed mainly through independent regional distributors instead of directly to completed products users, which was the previous policy. The company sales all its product on credit. Your own company, which has substantial resources, is a major user of these products. You have recently been asked by the financial director of Pigment Limited whether your company would be willing to provide short-term loan finance at current market rates. You have been given access to the accounts of Pigment for the past three years. Extracts form these accounts are shown below. Statement of Profit or loss and other comprehensive income for the year ending 31December 2XX5 2XX4 Rm Rm Turnover 200 176 (RBS) JULY 2022 Statement of financial position as at 31 December 2XX5 2XX4 Rm Rm Assets Property, plant and equipment 83 63 Current assets: Inventory 82 55 Trade debtors 55 42 Other receivables 2 1 Cash and cash equivalent 0 0 222 161 Equity and liabilities Ordinary share of 1R each 31 31 Retained earnings 66 61 Long-term loans 35 24 Current liabilities: Trade creditors 36 25 Dividends for shareholders 2 0 Taxation 5 3 Bank overdraft 47 17 222 161 You are required to the following: 3.1 Compute the following liquidity ratios for 2XX5 3.1.1 Acid test ratio. (2) 3.1.2 Current ratio. (2) 3.2 Compute the following activity ratios for 2XX5 (use 365 days and use turnover as cost of sales) 3.2.1 inventory turnover rate. (2) 3.2.2 debtor collection period (all sales are on credit). (2) 3.2.3 total assets turnover (2) 3.3 Discuss the liquidity ratios calculated in question 3.1 above. (8) 3.4 State what issues you would consider when deciding whether or not to Provide short -term loans finance to Pigment (Pty) Limited (7) 3.5 Discuss the limitations of using ratio analysis (5)