Answer ALL questions.

QUESTION $5.$

Solvency $($leverage$)$ ratlos refers to whether a business entity is able to pay Its debts as they become due, falling to do so will result in the business entity being forced Into llquidation or whding up by the creditors. Discuss the concept solvency ratio tells us about a company's financlal health?

$(10$ mark$8)$

QUESTION $6.$

Imagine you manage a coffee shop. You create a budget for monthly expenses based on your average sales volume. However, sales fluctuate throughout the year. How could a flexlble budget be heipful in this situation? Explain these differences by completing the table varlance below.

$(10$ mark$8)$

Flexible Budget Performance Report For the month ended $31$ December $2023$

$\backslash$table$[[$Budgeted number of clents,$5,000,,,],[$Actual number of cilents,$5,20$D$,,,],[$Overhead$,\backslash$table$[[$Cost$],[($per$],[$cilent$)]],\backslash$table$[[$Budget$],[$basedon$],[5,200],[$cllents$]],\backslash$table$[[$Actual$],[$costs$],[$incurtad$],[$for $5,200],[$cilents$]],$Varlance$],[$Varlable overhead costs:$],[$Postage supples,RM$1\mathrm{.}2$D$,$RM$6,24$D$,$RM$6,40$D$,],[$Govemment tax,$4\mathrm{.}00,20,800,22,300,],[$Electriclty $($varlable$),0\mathrm{.}20,1,040,1,020,],[\backslash$table$[[$Total varlable overhead$],[$costs$]],$RM$5\mathrm{.}40,$RM$28,080,$RM$29,720,],[\backslash$table$[[\backslash$table$[[\backslash$table$[[$Budgeted fixed$],[$ovemeadcosts:$]],,,,]]]]],[$Employee salarles,,$8,000,8,100,],[$Rent$,,12,000,12,000,],[$Insurance$,,1,000,1,000,],[\backslash$table$[[$Utlitles other than$],[$electricity$]],,500,470,],[$Total fred overhead costs,,$21,500,21,570,],[$Total overhead costs,,RM$49,580,$RM$51,290,]]$