The following are extracts from the balance sheets as at 31 March 20X4 and 31 March 20X5 of Glebe Ltd:

Required:

(a) Calculate for each of the two years two ratios that indicate the liquidity position of the company.

(b) (i) From the information given, give reasons for the changes which have occurred in the working capital.

(ii) What other information regarding the current assets and current liabilities would you consider necessary to assess the ability of the business to continue in operation?

(c) Discuss any other information available from a balance sheet that may affect an assessment of the liquidity of a business.

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Current assets Stocks Trade debtors Cash Less Current liabilities Trade creditors Proposed dividends Bank overdraft 31 March 20X4 £ £ 20,000 10,000 5,000 12,000 6,000 7,000 35,000 (25,000) 10,000 31 March 20X5 £ £ 25,000 17,000 3,000 16,000 5,000 29,000 45,000 (50,000) (5,000)