Financial management

Part I Ali Harooz runs a small Business unit. He is concerned with the liquidity position of his firm as he has heard that liquidity problems are one of the most frequent explanations for business failure. The following data is available: Particulars Amount Inventory 1,50,000 Cash 60,000 Sundry Debtors 300,000 Creditors 360,000 Bills Receivable 35000 Bank Overdraft 40000 Q1. Calculate the current ratio and liquidity (acid test) ratio based on the above data. (8 marks)4 marks on each ratio calculation Q2. Give a brief evaluation of the liquidity position of Ali Harooz Business unit (2marks)