QWESTION FOWR.
The following information has been extracted from the accounts of Nasa Investments Ltd, for the year ended 31 December 2020 and the figures for the previous year are also given.
Profit statement for the year ended 31 December
\begin{tabular}{|c|c|c|c|c|}
\hline & & Sh. \( { }^{2000} \) ' & Sh'000' & \\
\hline Sales & & 115,200 & 72.000 & \\
\hline Cost of goods sold & & 70800 & 42,000 & \\
\hline Gross profit & & 44,400 & 30,000 & \\
\hline Less: Trading expenses & & \( \underline{19800} \) & \( \underline{16,200} \) & \\
\hline & & 24,600 & 13,800 & \\
\hline Less: Debenture interest & & 900 & 900 & \\
\hline Net profit before taxation & & 23,700 & 12,900 & \\
\hline Less: Corporation tax & & 11520 & 5.760 & \\
\hline Net profit after taxation & & 12.180 & 7.140 & \\
\hline Less: Ordinary share dividend & & 6.300 & 4,500 & \\
\hline Undistributed profit for the year & & 5.880 & 2.640 & \\
\hline Balance sheet as at 31 December & & & & \\
\hline & 2020 & & 2021 & \\
\hline & Sh.'000' & Sh.'000' & Sh.'000' & Sh. \( 10000^{\prime} \) \\
\hline Non-current assets (cost) & & 44,400 & & 33.600 \\
\hline Depreciation & & 9000 & & 7,200 \\
\hline & & 35,400 & & 26,400 \\
\hline Current assets: & & & & \\
\hline Stock & 19,800 & & 14,400 & \\
\hline Debtors & 12,600 & & 9.000 & \\
\hline Cash & - & 32400 & 2,880 & \( \underline{26,280} \) \\
\hline Less: Current liabilities: & & & & \\
\hline Creditors & 7,200 & & 5.220 & \\
\hline Taxation & 11,520 & & 5,760 & \\
\hline Proposed dividends & 6,300 & & 4500 & \\
\hline Bank overdraft & 2,340 & (27,360) & - & \( \int 15,4800 \) \\
\hline Net assets & & 40440 & & 3.7 .200 \\
\hline Financed by: & & & & \\
\hline Ordinary share capital & & & & \\
\hline (Sh25 per share) & & 18,000 & & 18,000 \\
\hline Undistributed profits & & 16080 & & 10,200 \\
\hline & & 34,080 & & 28.200 \\
\hline Long-term loan: & & 6360 & & 9.000 \\
\hline 10\% debentures (secured) & & 40440 & & 37200 \\
\hline
\end{tabular}
Required:
a) Compute for both 2021 and 2020 the following ratios
i Gross profit to sales ratio
ii. The markup ratio
iii. Net profit to sales ratio
iv. Return on capital employed
v . The current ratio
b) Comment on Nasa Investment's liquidity and the profitability position.
c) State three limitations of financial ratios.