5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. I statement of financial performance of Babs Ltd for the year 2017 is provided below. Income Statement for the year ended 31 December, 2017 GHC Sales Revenue 15,000 Cost of Sales Gross profit Other operating Expenses (6,000) 9,000 (1,500) Profit before interest and tax 7,500 Interest (4,000) 3,500 (1,000) Tax Net Profit 2,000 Balance Sheet as at 31 December, 2017 GHC Non-Current Assets 50,000 Current Assets: Inventory 2,000 Trade Receivables 3,000 Bank 18,000 23,000 73,000 Equity & Liabilities; Share Capital (100,000 shares) Retained Earnings 40,000 13,000 53,000 Non-Current Liabilities 22% Loan Note 18,000 Current liabilities Trade Payables 2,000 20,000 73,000 The ratios of the competitor is summarized below; Gross Profit Margin 30% Net Profit Margin 25% Return On Capital Employed (ROCE) 8% Current Ratio 3 times (3:1) Acid Test Ratio 2.8 times (2.8:1) 40% Debt to Equity Inventory Turnover Period Trade Receivable Collection period Account Payable Holding Period 20 days 70 days 100 days Required a. Calculate comparable ratios for Babs Ltd. b. Write a report to the Board of Directors of Babs Ltd analyzing the operational performance and efficiency of the company using the competitor as a benchmark. c. State two (2) importance and limitations of using ratios to analyze financial statements