Question (1) Innovation Ltd. is a young business operating in an emerging market, and it has delivered impressive sales results and high profitability. Indeed, it appears that Innovation is emerging as the market leader. The business is seeking an overdraft limit to help finance its rapidly growing sales, but it is unable to provide any security because it has not yet built up a tangible asset base. How should you proceed? The business appears to comfortably pass the cash flow test, although it is unlikely to pass the solvency test. Your analysis should continue given the potentially strong cash flow going forward. O Although it would pass the cash flow test, it would not pass the solvency test. Unless it passes both tests, it should not be approved. Although it would pass the cash flow test, it would not pass the solvency test. This results in a bias to fail, and so it would not be appropriate to continue the analysis. Bookmark for review Submit