QUESTION 1 (41 marks) Invest Ltd is the parent entity of its group. Invest Ltd.'s main objective is to invest in entities which it considers to be "good investments" by purchasing a majority shareholding. Invest Ltd has the following subsidiaries: 1.His & Hers Ltd. His & Hers Ltd is an entity which imports clothing and other accessories from China. They place their orders at the Chinese suppliers generally 2 weeks before shipment is made to them. Once the order is placed, His & Hers are obligated to purchase the goods ordered. Often the purchase is made on short-term credit from the suppliers (e.g., 120 days until payment, etc.) His & Hers Ltd then sells the goods in South Africa. Customers are also allowed to purchase on credit from His & Hers Ltd. 2. Veld Ltd. Veld Ltd is a local flower grower which sells Proteas and Fynbos to the European market. Because flowers perish fast, once the European customer purchases the flowers, they are loaded onto aircrafts (owned by South African entities) and flown to Europe. Invest Ltd has debt-funding as part of their finance structure (60:40 debt-equity ratio) in order to provide required finances to the group. The loans have interest rate of 4.5% above the prime rate. 3 HEMN331-1-Jul-Dec2021-SA1-ES-V4-25052021 Required: 1.1 Identify and then explain the financial risks within the Invest Ltd.-group. Please see below format to use for answer. (19 marks) 1.2. For each financial risk identified, list and explain two possible financial risk management approaches. Please see below format to use for answer. (22 marks) Provide your answer for 1.1 and 1.2 in the following format: 1.1) Financial Explanation of Financial risk 1.2) Management risk risk Identified Identified approach