Persimmon Berhad has been particularly concerned with its liquidity position in recent months. The most recent income statement and balance sheet of the business are as follows:

Income Statement for the year ended 30 June 2023

The receivables and payables were maintained at a constant level throughout the year. All sales and purchases are on credit terms.

Required:

A. What is the liquidity position of the company? Support your answer with relevant ratios and discussion of these ratios.

B. What is the Cash Conversion Cycle for the company? Assume a 360-day year.

C. Suppose that offering discounts to customers has the effect of reducing the number of days for customers to settle their debts to 100 days. What is the revised Cash Conversion Cycle? Assume a 360-day year

D. Recommend TWO (2) sources of finance the company can use in the short-term. Explain how these short-term sources of finance can contribute to improving the companys liquidity position.

Please do share all formulas for understanding purpose

SalesrevenueLessCostofSalesOpeninginventoriesAddPurchasesLessClosingInventoriesCostofSalesGrossProfitExpensesRM00018851121513RM000678484194207 Balance Sheet as at 30 June 2023 Non-current assets Freehold premises Fixtures and Fittings (Carrying Amount) Motor Vehicles (Carrying Amount) Current Assets Inventories 215 Receivables 245 460 Less Current Liabilities Trade payables 218 Bank overdraft 210 428 Working Capital 32 Less Non-Current Liabilities 568 Loans 180 Equity 388 Ordinary Share Capital 150 Retained Profit 238 388 SalesrevenueLessCostofSalesOpeninginventoriesAddPurchasesLessClosingInventoriesCostofSalesGrossProfitExpensesRM00018851121513RM000678484194207 Balance Sheet as at 30 June 2023 Non-current assets Freehold premises Fixtures and Fittings (Carrying Amount) Motor Vehicles (Carrying Amount) Current Assets Inventories 215 Receivables 245 460 Less Current Liabilities Trade payables 218 Bank overdraft 210 428 Working Capital 32 Less Non-Current Liabilities 568 Loans 180 Equity 388 Ordinary Share Capital 150 Retained Profit 238 388