Question One The following are summarized financial statements of Dan Limited for the year ended 31st December 2020.comparable figures for the previous year are also shown Income statement for the year ended 31 st December 2020 2020 2019 Shs 000 Shs 000 Sales 115,200 72,000 Less cost of goods (70,800) (42,000) GROSS PROFIT 44,400 30,000 Trading expenses (19,800) (16,200) Net profit before interest and tax 24,600 13,800 Less debenture interest (900) (900) Net profit before tax 23,700 12,900 Less corporate tax (11,520) (5,760) Net profit after tax 12,180 7,140 Less ordinary share dividend (6,300) (4,500) Undistributed profit for the year 5,880 2,640 2 Statement of financial position as at 31st December 2020 2020 2019 Shs 000 Shs 000 Assets employed Fixed assets 44,400 33,600 Less depreciation (9,000) (7,200) 35,400 26,400 Current Assets Inventories 19,800 14,400 Accounts Receivable 12,600 9,000 Cash/bank balance 0 2,880 Total Assets 67,800 52,680 Equity and liabilities Payables 7,200 5,220 Taxation 11,520 5,760 Bank overdraft 2,340 0 Proposed Dividend 6,300 4,500 Ordinary share capital Authorized, issued and fully paid Shs 25 per share 18,000 18,000 Undistributed profits 16,080 10,200 15% debentures (secured) 6,360 9,000 67,800 52,680 N/B Assume of the sales are on credit Required: a) Compute the different facets of an enterprises finances and operations using the following categories of ratios: i. Liquidity ratios ii. Leverage ratios iii. Activity ratios iv. Profitability ratios v. Investment ratios b) Discuss the limitations of ratio analysis 30Marks