1. Thefollowingratiosofabusinessaregiventoyou.Youarerequestedtointerpretanddothe financial judgement based on yourunderstanding. (10 marks)

Current ratio 564 880 / 351 100=1.6 times

Profitmargin 102 500 / 2 900 000=3.5%

Stock turn-over 1 750 000 / 135 230=12.94 times

2. Explain threemotives ofholding cash by a business. (6 marks)

3. BabokiLtdareplanningtoinvestinanewprojectwhichwillcostaninitialP375000andthey expect thefollowing cash.

Year	1	NetCashProfits (P) 25 000
	2	55 000
	3	70 000
	4	80 000
	5	40 000
	6	30 000

TheinvestmentwillbedepreciatedtoascrapvalueofP175,000overtheperiodoftheproject.

Calculate theAccounting Rate ofReturn (Return on Capital Employed)of theproject.(4 marks)

4. Explain thedifferences between fixed and flexiblebudgets and their relevancein evaluating operational performance. 5Marks