Refer to the attached partial financial statements for the Tuvalu Islands government when answering this question (Reck, et al 2016, p.437-440, emphasis added). Required i) Calculate and Analyse the strength and weaknesses of the following ratios for Governmental activities and Business-type activities for the Tuvalu Islands government for the years 2017 and 2016. ii) Discuss the trends you noticed from the above ratios. a) Debt to assets ratio (7 marks) b) Current ratio (7 marks) c) Quick ratio (7 marks)

Tuvalu Islands Statements of Net Position As of December 31 (In Thousands) 2017 2016 2015 Business- Business- Business- Governmental type Governmental type Governmental type Activities Activities Total Activities Activities Total Activities Activities Total Assets Current assets: Cash $ 5,540 $ 1,800 $ 7,340 $ 4,531 $ 1,663 $ 6,194 $ 3,452 $.1,487 $ 4,939 Investments EEL 291 1,024 869 181 819 769 179 948 Receivables (net) 2,747 1,809 4,556 2.947 1,608 4,555 1.865 1,472 3,337 Prepaid expenses 253 261 251 6 257 171 5 176 Inventories 26 58 84 101 48 149 167 49 216 Total current assets 9,299 3,966 13,265 8,468 3.506 11,974 6,424 3,192 9.616 Capital assets. Land 2,180 2, 101 4.281 2,070 1,804 3,874 1,971 1,604 3,575 Depreciable assets 37,600 14,455 52,055 37,183 17,775 54.958 39,347 14,801 54,148 Accumulated depreciation (15,039) (5,782) (20.821) (16,732) (9.776) (26,508) (19,680) (7.402) (27,082) Total capital assets (net) 24,741 10,774 35,515 22,521 9,803 32,324 21,635 9,003 30.541 Total assets 34,040 14,740 48,780 30.989 13,309 44.298 28,062 12,195 40.257 Liabilities Accounts payable 1,580 467 2,047 412 376 788 1,633 295 1,928 Deferred revenue 32 32 30 30 42 42 Other, current 1,754 200 1,954 1,443 190 1.633 1,489 170 1,659 Total current liabilities 3,366 667 4.033 1.885 566 2,451 3,164 465 3,629 Bonds payable 15,900 6,500 22,400 16,900 7,500 24,400 15,900 6,500 22,400 Total liabilities 19,266 7.167 26,433 18,785 8,066 26,851 19,064 6.965 26,029 Net Position Net investment in capital assets 9,104 4,027 13,131 7,945 3,065 11,010 5,366 2,067 7,433 Restricted for. Capital projects 140 140 151 151 130 130 Debt service 933 933 1,033 1,033 318 818 Unrestricted (deficit) 4,597 3,546 8, 143 3,075 2,178 5,253 2,683 3,163 5,846 Total net position $14,774 $ 7,573 $27,347 $12,204 $ 5,243 $17,447 $ 8,997 $ 5,230 $14,227Tuvalu Islands Statement of Activities For the Year Ended December 31, 2017 (in thousands) Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: General government $ 5.716 $ 531 $ (5,185) 1 (5,185) Judicial 1,926 716 99 (1,111) (1,11 1) Public safety 7,958 1,530 168 (6,260) (6,260) Health and sanitation 2,804 524 (2,280) (2,280) Culture and recreation 2,166 554 $495 (1,117) (1,117) Road maintenance 2.455 5 1,619 (831) (831) Interest on long-term debt 948 (948) (948) Total governmental activities 23,973 3,860 1.886 495 (17.732) (17,732) Business-type activities 2,895 5,218 $2.330 2,330 Total government $26,868 $9.078 $1,886 $502 (17,732) 2,330 (15,402) General Revenues: Property taxes 17,296 17,296 Grants and contributions not restricted to specific programs 2.190 2,190 Investment earnings 716 716 Special item-gain on sale of land 100 100 Total general revenues and special iterms 20,302 20,302 Change in net position 2.570 2,330 4.900 Net position-January 1 12.204 5,243 17,447 Net position- December 31 $14.774 $7.573 122,347Tuvalu Islands Statement of Activities For the Year Ended December 31, 2016 (in thousands) Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: General government $ 4,133 $ 148 $ (3,985) $ (3,985) Judicial 1,737 209 $ 17 (1,511) (1,511) Public safety 5,239 1.943 30 (3,266) (3,266) Health and sanitation 2.129 147 (1,982) (1,982) Culture and recreation 3,762 322 $350 (3,090) (3,090) Road maintenance 1,055 501 (554) (554) Interest on long-term debt 304 (804) (804) Total governmental activities 18,859 2,769 548 350 (15,192) (15,192) Business-type activities 4,287 4,290 10 S 13 13 Total government $23,146 $7,059 $548 $360 (15.192) 13 (15,179) General Revenues: Property taxes 13,619 13,619 Grants and contributions not restricted to specific programs 3,664 3,664 Investment earnings 916 916 Special item-gain on sale of land 200 200 Total general revenues and special items 18,399 18,399 Change in net position 3,207 13 3,220 Net position-January 1 8,997 5,230 14,227 Net position-December 31 $12,204 $5,243 $17,447