Answer the following:

a)What does liquidity measure? Explain the trade-off a firm faces between high liquidity and low liquidity levels.

b) Why might the revenue and cost of figures shown on a standard statement of comprehensive income not be representative of the actual inflows and outflows that occurred during a period?

c) In preparing a statement of financial position, why do you think standard accounting practice focuses on historical cost rather than market value?

i) Could a company's cash flow to shareholders be negative in a given year? Explain how this might come about. What about cash flow to creditors?

j) A firm's enterprise value is equal to the market value of its debt and equity, less the firm's holdings of cash and cash equivalents. This figure is particularly relevant to potential purchasers of the firm. Why?