Zeus Plc is a company involved in the pharmaceutical industry. The Financial Statements for the company for the years 2021 and 2020 have been made available to you (See Appendix 1 to this exam paper). In order to expand, the Company requires long-term finance. They require a loan of approximately €30m and the company has approached a number of banks to borrow this money. All of the banks have expressed concerns in relation to the liquidity position of the company and the ability of the company to meet interest payments.

Required:

Write a report to the Managing Director of Zeus Plc. and address the following:

(a) Critically analyze the Company’s liquidity position.

(15 marks)

(b) Critically analyze whether in your view the company has the ability to meet the additional interest payments that would arise if a bank lent them the requested €30m?