Muller Books Limited $($MBL$)$

Muller Books Limited $($MBL$)$ is a small business specializing in publishing and distributing educational books and resources. The privately listed company was founded by Sarah Muller. MBL has a small office in Dresden, Germany. The company employs $4$ full$-$time staff and several part$-$time staff. Sarah has a good working relationship with her staff and the local bank manager.

MBL has enjoyed several years of expansion in the provision of online education products, such as interactive e$-$books and online teacher training courses for a wide range of subjects. However, these are becoming somewhat dated, and several rival companies have recently established an online presence in the market. The booming economy has also meant that interest rates in Germany are on an upwards trend.

Five years ago, Sarah was able to secure a patent $($legal protection$)$ on a piece of software used for MBL$$s online teacher training. The company has been dependent on this software for establishing a broad customer base. Sarah has been informed by Lucy Croft$-$Wang, her accountant, that MBL$$s software developmental expenses have risen dramatically. Lucy presented the following financial information for MBL as of $31$st December $2019,$ which raised some working capital and liquidity issues. All figures are expressed in euros $()$:

Cost of sales $90,000$

Current assets $60,000$

Current liabilities $55,000$

Expenses $60,000$

Non$-$current assets $750,000$

long term liabilities $320,000$

Retained profit $85,000$

Sales revenue. $350,000$

Shareholders$350,000$

$($a$)$ Define the term non$-$current assets.

$($b$)$ Construct a profit and loss account for MBL using the financial information above.

$($c$)($i$)$ Calculate the value of the current ratio.

$($c$)($ii$)$ Using your answer from $($c$)($i$)$ and the information in the case study, explain why MBL is said to have $$some working capital and liquidity issues$.$

$($d$)$ Examine possible financial strategies that Sarah Muller could use to deal with her company$$s working capital and liquidity issues