Part 1: Pearl Company has prepared the following financial statements:Income Statement (AED in millions)Net SalesAED 3,648Cost of Sale2,469Gross Margin1,179Operating expenses641Selling and Administrative expenses300Gain on sale of equipment3Income before taxes231Income taxes91Net Income150Comparative Balance Sheet (AED in millions)December 31, 2015December 31, 2014Current AssetsCash & Cash Equivalent9129Short-term Investments3254Accounts Receivable605600Inventory574527Other Assets1210Total Current Assets1,3141,220Property, Plant & Equipment1,5171,394Less: Accumulated depreciation654561Net Property, Plant & Equipment863833Total Assets2,1772,053Liabilities & Shareholders' EquityAccounts Payable264220Accrued Liabilities193190Income Taxes Payable7571Total Current Liabilities532481Bonds Payable279320Long-term Bank Loans200200Total Liabilities1,0111,001Shareholders; EquityShare Capital157155Retained Earnings1,009897Total Liabilities & Shareholders' Equity2,1772,053The Company also released the following information for 2015:a. The Company sold some equipment for 8 million dirham. The original cost of the equipment was 12 million dirham and accumulated depreciation for this equipment was 7 million dirham. The gain on sale was 3 million dirham.b. The Company has paid cash dividends during the year.Required:1. Prepare a statement of cash flows (10 marks)2. How much free cash does the company have at the end of 2015? (2 marks)Part 2: (8 marks)Instructions:A. Visit the webpage of Dubai Financial market (www.dfm.ae) and download the financialstatements of Gulfa Mineral Water Co for the year 2014 (alternatively, you can visit theCompany's web page and download the financial statements of the company).B. Read the financial statements and answer each of the following Questions. Show all yourworkings.Questions1. What is the percentage change in net income for 2014 in comparison to 2013? What does this changemeans?2. What is the percentage of cost of sales for 2014?3. What is the rate of return on average assets?4. Calculate the rate of return on average shareholders' equity5. Calculate the current ratio, quick ratio, and times interest coverage for 20146 What is the debt ratio for 2014? How does it differ from 2013?7. Assume the company is seeking financing from a bank. Would you recommend the bank to lend thecompany the money it is asking for based on the ratios you calculated above? Explain yourrecommendation.8. Assume you have some money to invest in shares. Would you seek to become a shareholder of thiscompany? Explain your decision.GGoo tthhrroouugghh tthhee attached Financial Statement of Gulfa Mineral Water Co for the Year 2014.