Laura Prebble, the owner-manager of a small business, had carefully monitored her cash position over the past financial year, and was pleased to note at the end of the year that the cash position was strong, and had shown a healthy 50% increase over the year. When presented with the income statement for the year, she was dismayed to note that the profit earned in the last year had deteriorated significantly and had become a loss for the current period. In her anger, she accuses you of having made errors in the accounting since 'such a silly situation could not possibly exist'. Required Draft a response to Laura. Task 2 (10 marks – approximately 500 words) 'A statement of cash flows is of limited use as a business needs to know if it will have sufficient cash to support its planned future activities.' Required Discuss the merit of this statement focusing on both the purpose and limitations of a statement of cash flows. Task 3 (10 marks – approximately 500 words) After calculating the current ratio for an entity and finding that the ratio's value was 5:1, a student analyst decided that the company was in a sound position for paying its liquid liabilities. Required Discuss the shortcomings of making such a conclusion.