Question 2 Buxton plc has a chain of retail outlets throughout the UK. Each outlet operates as a separate company. Buxton collects and analyses data from each of its outlets on a quarterly basis and at the end of the year produces a statement of average performance. This year's statement showed: Profit margin Asset turnover Return on capital employed Gearing The financial statements from their South West outlet show: 22% 5.0 55% 80% Statement of profit and loss for the year ended 31 December 2020 000 9,700 Revenue Cost of sales 7,480 Gross profit 2,220 Operating expenses were 1,340,000 and the tax charge was 360,000. There are no finance costs other than the loan interest. The company has 2,800,000 ordinary 50p shares in issue and retained earnings of 860,000. The non-current assets are valued at 2.2 million and the company has a long-term loan of 1,200,000 on which it pays interest at 10%. The average market price of the shares was 3 in 2020. Dividends of 240,000 were declared and paid in the year. Required: a) Explain what each of the ratios in the statement of average performance tells the reader. b) Calculate the same ratios for the South West outlet. c) Explain the limitations of ratio analysis.