Read the given financial statement and answer the question that follow. Statement of Financial Performance of AfroTech for the year ended $30$ December Revenues: Net Sales $5,000,000$ Cost of Goods Sold Beginning Inventory $1,000,000$ Purchases $2,500,000$ Ending Inventory $(1,200,000)$ Total COGS $2,300,000$ Gross Profit $2,700,000$ Operating Expenses: Salaries and Wages $500,000$ Rent $150,000$ Utilities $50,000$ Depreciation $100,000$ Advertising $70,000$ Total Operating Expenses $870,000$ Operating Income $1,830,000$ Other Income and Expenses: Interest Income $10,000$ Interest Expense $(40,000)$ Total Other Income and Expenses $(30,000)$ Income Before Taxes $1,800,000$ Income Tax Expense $(30\%)(540,000)$ Net Income $1,260,000$ Statement of Financial Position of AfroTech Ventures for the year ended $31$ December $2023($R$)$ Assets: Current Assets: Cash $600,000$ Accounts Receivable $700,000$ Inventory $1,200,000$ Prepaid Expenses $50,000$ Total Current Assets $2,550,000$ Non$-$Current Assets: Property, Plant, and Equipment $1,800,000$ Less: Accumulated Depreciation $(300,000)$ Net Property, Plant, and Equipment $1,500,000$ Intangible Assets $($Goodwill$)200,000$ Total Non$-$Current Assets $1,700,000$ Total Assets $4,250,000$ Liabilities and Equity: Current Liabilities: Accounts Payable $400,000$ Short$-$Term Loans $300,000$ Accrued Expenses $100,000$ Total Current Liabilities $800,000$ Non$-$Current Liabilities: Long$-$Term Debt $1,000,000$ Total Non$-$Current Liabilities $1,000,000$ Total Liabilities $1,800,000$ Equity Common Stock $1,000,000$ Retained Earnings $1,450,000$ Total Equity $2,450,000$ Total Liabilities and Equity $4,250,000$ Cash Flow Statement AfroTech Ventures for the Year Ended $31$ December $2023$ Amount $($R$)$ Cash Flows from Operating Activities: Net Income $1,260,000$ Adjustments for: Depreciation $100,000$ Changes in Working Capital: Increase in Accounts Receivable $(100,000)$ Increase in Inventory $(200,000)$ Increase in Prepaid Expenses $(10,000)$ Increase in Accounts Payable $50,000$ Increase in Accrued Expenses $20,000$ Net Cash Provided by Operating Activities $1,120,000$ Cash Flows from Investing Activities: Purchase of Property, Plant, and Equipment $(400,000)$ Net Cash used in investing activities $(400,000)$ Cash flows from financing activities: Proceeds from Long$-$Term Debt $500,000$ Repayment of Short$-$Term Loans $(200,000)$ Interest Paid $(40,000)$ Net cash provided by financing activities $260,000$ Net increase in cash $980,000$ Cash at the beginning of the year $380,000$ Cash at the end of the year $1,360,0001\mathrm{.}1\mathrm{.}1$ Critically evaluate the effectiveness of traditional financial statements in providing a comprehensive view of a company's performance. What additional information might be necessary for a more complete analysis? $[5]1\mathrm{.}1\mathrm{.}2$ Based on the given financial information, can AfroTech Ventures meet its short$$and long$-$term obligations? What conclusions can you draw about the company's financial leverage? $[8]1\mathrm{.}1\mathrm{.}3$ Using a net profit margin, evaluate AfroTech Ventures' profitability based on the net income and total revenues. $[3]1\mathrm{.}1\mathrm{.}4$ Explain the significance of net cash provided by operating activities. Why is this figure crucial for assessing AfroTech Ventures' financial health? $[2]1\mathrm{.}1\mathrm{.}5$ If a company has a high debt$-$to$-$equity ratio compared to its industry peers, what are the potential risks and benefits of this financial structure? How should the company's management address these risks? $[5]1\mathrm{.}1\mathrm{.}6$ You are a financial analyst evaluating two companies in the same industry. Company A has a higher current ratio but a lower quick ratio than Company B$.$ Discuss the potential reasons for this difference and its implications for each company's liquidity. $[5]$