You are a commercial underwriter for a commercial lines insurer specialising in retail businesses. The insurer's underwriting policy is to only insure financially secure businesses. An insurance broker has asked you for an insurance quotation for one of their clients, MN plc, who is a clothing retailer. The broker has provided you with the following financial information for MN plc. Balance sheet for MN plc as at 31/12/2019 Balance Sheet '000's '000's Assets Non-current assets Land 12,000 Buildings 10,000 Machinery 500 Total 22,500 Current assets Cash 10,000 Debtors (trade receivables) 1,000 Stock 18,000 Total 29,000 TOTAL ASSETS 51,500 Equity and liabilities Equity Share capital 13,000 Reserves 3,500 Total equity 16,500 Non-current liabilities Long-term borrowings 13,500 Total 13,500 Current liabilities Creditors 15,000 Short-term borrowings 6,500 Total 21,500 TOTAL EQUITY AND LIABILITIES 51,500 M92/2020 M92: Insurance business and finance 5 Copyright 2020 The Chartered Insurance Institute. All rights reserved. Income statement for MN plc for the year ending 31/12/2019 Income statement '000's Revenue 108,000 Cost of sales (57,000) Gross profit 51,000 Operating expenses (47,500) Profit before Tax 3,500 Tax expenses (665) Profit for the period 2,835 Note: Figures in brackets are negative. (a) Calculate, showing all your workings, the financial position of MN plc. Use one appropriate profitability ratio and three other appropriate non-profitability financial ratios. (8) (b) Analyse, based on your calculations in (a) above, the suitability of MN plc as a risk to be insured. (6) (c) Recommend, based on your analysis in (b) above, the two most significant financial concerns about MN plc to raise with the insurance broker.