QUESTION ONE (20 MARKS) The working capital of ABC Ltd has deteriorated in recent years and now stands as under: Current Assets Shs Current Liabilities Shs Inventory 560,000 Creditors 490,000 Debtors |3,350,000 Bank loan 210,000 Cash 70,000 980,000 700.000 Required a) Compute atleast two liquidity ratios and comment on the company's liquidity. (4 Marks) b) A further bank loan of shs. 50,000 against debtors is under negotiations. Assuming the loan is received; calculate the revised liquidity ratios and advise whether the additional bank loan was appropriate to improve financial distress status of the company. (4 Marks) c) There is also a negotiation going on for discounting the debtors of Shs. 350,000 for Shs. 315,000 to a collection agency for immediate cash. Also obsolete stocks worth shs 125,000 are being sold for shs. 80,000. Out of the cash to be realized by the two transactions, the bank loan is proposed to be reduced to shs 100,000. Calculate the the appropriate liquidity ratio after the transactions are put through. (6 Marks) d) Discuss the role of Regulatory Authorities in the disclosure of financial statements (3 marks) e) Discuss the various disclosures required for the purposes of financial statement analysis using a company example of your own choice (3marks)