QUESTION 1 (20 Marks) 1.1 Differentiate between the following terms as you define them. (4 marks) a. Insolvency and illiquidity b. Diversifiable risk and non-diversifiable risk c. Dividends and retained earnings d. Owners' equity and debt equity 1.2 Roles of a financial manager (4 marks) The manager in your hotel wants to promote you to a new position that has arisen in the finance department. As a qualification to ascend to this new position she has asked you to explain ANY FOUR (4) major roles that you will be involved or engaged in as the financial manager. 1.3 Working capital management (4 marks) Working capital management is a balancing act because of the different effect that it has on the entity's overall performance. State the objective of developing a working capital policy and discuss the major issues which must be addressed when formulating such a policy. 1.4 Ratio analysis. (4 marks) Ratio analysis is one of the important techniques of determining the performance of financial strength and weakness of an entity. Comprehensively discuss the pitfalls attributable to ratio analysis. 1.5 Budgeting (4 marks) Explain the competing objectives of cash management and also outline the advantages of using cash budget