Mega Vision Co is a supermarket retail chain. Excerpts from its financial statements for the previous two financial years are presented below:

Statements of financial position as of 31 December

	20X5	20X6
	($million)	($million)
Non-current assets Buildings	120	120
Current assets Inventory Accounts receivable Cash and short-term investments	140 20 70	160 35 80
Total assets	350	395
Owners Equity Ordinary share capital Retained earnings	140 22	140 28
Long term liabilities 10% loan notes	18	15
Short-term liabilities Accounts payable Overdraft	170 -	200 12
Total Owners equity and liabilities	350	395

Income statement as of 31 December

	20X5	20X6
	($million)	($million)
Sales	85	100
Cost of sales	35	42
Gross margin	50	58
Distribution and administrative costs	12	14
Finance cost	2	1
Profit before taxes	36	43

Required:

(a) Compute the current and quick ratios and discuss whether the company has liquidity problems.

(a) Explain what the cash operating cycle is, and compute it for the two consecutive financial years, commenting on your findings.

(b) Discuss the manner in which factoring can help Mega Vision Co manage its receivables.