QUESTION 3 (40 MARKS) You have been asked by your CEO to evaluate, analyse and calculate commonly used ratios relat ing to a company's profitability, liquidity, solvency and management efficiency. Requirement: a. Complete the balance sheet and sales data (fll in the blanks), using the following fnancial da ta: 60% Debtet worth Acid test ratio 1.2 Asset turnover 1.5 times Day sales outstanding in accounts receivable 40 days Gross profit margin 30% Inventory turnover 6 times Balance sheet Cash Accounts receivable Inventories Plant & equipment Accounts payable Common stock RM15,000 Retained earnings RM22,000 Total assets Total liabilities & capital Sales Cost of goods sold (20 marks) a. Explain how do analysts use ratios to analyse a fim's leverage? Which ratios convey more im portant information to a credit analyst those revolving around the levels of indebtedness or th ose measuring the ability to service debt? What is the relationship between a f im's level of in debtedness and risk? What must happen in order for an increase in leverage to be successfu 1? Discuss and illustrate all your answer. (20 marks)