[Question 5] The following information relates to Lambert Company Lid for the year 2020. In addition to the income statement and balance sheet, information relating to the industry average 1s also provided. Lambert Company Litd Income Statement for the year ending December 31, 2020. s 5 Sales 600,000 Opening stock 50,000 Purchases 430,000 480.000 Less closing stock 60,000 420,000 Gross profit 180,000 Less running expenses 100,000 Net profit before tax 80,000 Less interest 8.000 Profit before taxes 72,000 Less taxes 30.000 Profit after tax 42000 Less dividends 2.000 Retain profits for the year 40,000 Lambert Lid Balance sheet as at December 31 2020 $ Fixed assets 140 000 Current assets Stocks 60,000 Debtors 2,000 Bank and cash 38,000 100,000 Less current assets 40.000 60,000 Net assets employed 200,000 Share capital Ordinary shares 20,000 Profit and loss account 100,000 120,000 10 % debentures 80,000 Net capital employed 200,000 Industry averages for the year ending 31 December 2020. Ratios Industry Averages Current Ratio 3x Quick Ratio 1.5x Gross Margin 45% Net Margin 6% Inventory turnover 3 times Required: Calculate the following ratios for Lambert Ltd. a) Current ratio. (2 marks) b) Quick Ratio. (2 marks) c) Gross margin (2 marks) d) Net Margin (2 marks) e) Inventory turnover ratio (2 marks) f) Compare the calculated ratios to the industry averages. (10 marks) g) Clearly explain the term ratio analysis and list any four (4) limitations of financial statement analysis. (5 marks) Total 25 marks