Q2 A. (20 Marks) 1. What is the importance of Ratio analysis of Financial Statements? Give two examples of (10 Marks) a. Short Term Solvency or Liquidity Ratio, b. Long Term Solvency or Financial Leverage Ratio, c. Asset Utilization Turnover Ratio, d. Profitability Ratio I 2. Calculate the following: (10 Marks) a) A firm has $1.2 million in current assets and $1.0 million in current liabilities. If it uses $0.5 million of cash to pay off some of its accounts payable, what will happen to the current ratio? What happens to the net working capital? b) A firm uses cash on hand to pay for additional inventories. What happens to the current ratio? What happens to the quick ratio