Question 1 (35 marks) Case Study - Financial performance analysis to assess liquidity risk The management of business operating in the fashion retailing industry is very concerned about the threat that online shopping and the increasing competition from local and international fashion retailers offering their products and services online hold for the business and its continued existence. The management of the business realise that online shopping is here to stay and that the business will need to consider how it will respond to this threat, how the business needs to adapt to the changing market environment as well as the changes in consumer shopping in the fashion industry. Business management also realises that it will have to tighten the controls over is finances and particularly its cash flows and liquidity if it wants to remain a competitor in the industry and remain viable as a going concern. To evaluate its current liquidity status, business management employed a business consultant. The consultant performed a financial analysis based on the financial ratios that speak to liquidity and prepared the following set of relevant ratios for the period 2022 - 2024. Table 1: Selected liquidity ratios for 2022-2024 2022 2023 2024 Current ratio 1.09:1 1.05:1 0.98:1 Quick ratio 0.74:1 0.63:1 0.50:1 Cash ratio 0.43 0.30 0.26 Cash flow to revenue ratio 19% 17% 14% 1.1 Use the information provided to analyse and evaluate the status of the liquidity position of the business. You may identify causes for any liquidity challenges but do not provide solutions. Your analysis and evaluation must include all the ratios listed in (29) Table 1. 1.2 Present business management with six possible consequences that liquidity challenges (6) can have for the business