Background: XYZ Corporation, a manufacturing company, is undergolng a financlal analysis to assess its current position. The company's balance sheet indicates fluctuations in its assets and lifabilities over the past fiscal year. The management is keen on understanding the impact of these changes on the overall financial health of the organization. Financial Position: 1. Assets: - Current Assets: There has been a significant increase in cash reserves and accounts recelvable. - Non-Current Assots. The company has made substantial investments in new machinery and equipment. Liabilitios: - Current Liabilites: There is an increase in short-term debts and accounts payable. - Long-Term Liabilities: The company has taken on additional long-term debt to fund expansion projects. Operational Changes: XYZ Corporation has expanded its production capacily to meet growing market demand. However, the increase in short-term debts and accounts payablo has raised concerns about liquidity, while the new irvestments in machinery Indicate a commitment to long-term growth. Proposed Solutions: Working Capital Management: Evaluate and implement strategies to manage working capital effectvely, ensuring that current assets are optimized to cover shortterm obligations. 2. Debt Repayment Plan: Develop a plan to systematically repay short-term debts and manage the increased long-term liabilities to maintain a healthy debt-equity ratio. 3. Asset utilizatlon: Implement measures to maximize the utilization of newly acquiled. machinery, ensuring that it contributes to increased production efficiency and profitability. Implementation Plan: The company plans to implement these solutions over the next fiscal year, closely monitoring financial indicators and adjusting strategies as needed. Questions: 1. How might the increase in current assets, specifically cash reserves and accounts receivable, impact the liquidity and short-term financial health of XYZ Corporation? 2. Considerling the expanslon projects and additlonal long-term debt, how can XYZ Corporation ensure a balance between long-term growth and malintaining a manageable level of financial leverage