84.In analysing the financial statements of Regis Ltd, the following ratios were calculated.

	2023	2022
Current ratio	1.1:1	1.3:1
Quick ratio	0.5:1	0.7:1
Receivables turnover	30 days	45 days
Inventory turnover	3 times	4 times
Payables turnover	60 days	45 days
Gross profit margin	10%	7%
Return on equity	15%	12%

Required:

1. Evaluate the entitys liquidity using the above information.
2. A condition of obtaining a long-term loan from the Scots Bank is that the current ratio should not fall below 1.25:1. Examine the effect on this condition if Regis Ltd considers two courses of action: either to borrow cash with a long-term loan of $90,000 from the bank; or by negotiating with creditors to settle $90,000 of payables with a long-term Note Payable. Assuming the current assets and current liabilities are 660,000 and 600,000 respectively, what course of action would you recommend and why?