Question $5(20$ Marks$)$

Events Management Ltd is a company which specialize in events management and also involved designer brands. Recently the company is experiencing cash flow problems. The financial director Events Management has recently set up a meeting with you, to discuss whether the bank would be willing to provide shor$-$term finance to Events Management, as it is experiencing short$-$term cash$-$ flow problems.

Events Management is willing to pay interest on this short$-$term loan at current market related interest rates. The financial director has given you access to the financial statements for the past two years.

Events Management Ltd

Extract from the statement of profit or loss and other comprehensive income for the year ending $31$ December.

$\backslash$table$[[,2022,2021],[,$N$$,$N$$],[,,],[$Revenue$,355000,350000],[$Cost of sales,$(230750),(227500)]]$

Statement of financial position as at $31$ December $2022$

$\backslash$table$[[,2022,2021],[,$N$$,$N$$],[$Assets$],[$Property$,$ plant and equipment,$125000,120000],[$Current assets,$188000,178000],[$Inventory$,110000,100000],[$Trade debtors,$75000,66000],[$Other receivables,$3000,4000],[$Cash and cash equivalents,$0,8000],[$Total assets,$313000,298000],[,,],[$Equity and liabilities$],[$Equity and reserves$],[$Ordinary share capital,$51000,51000],[$Retained earnings,$125000,120000],[,,],[$Liabilities$],[$Long$-$term loans,$47000,66000],[$Current liabilities,$90000,61000],[$Trade creditors,$66000,53000],[$Income tax payable,$4000,8000],[$Bank overdraft,$20000,0],[$Total Equity and liabilities,$313000,298000]]$REQUIRED:

a$)$ Calculate the relevant ratios for $2021$ and $2022$ required for an analysis of Events Management Ltd$$s liquidity position and management of its assets. Use $365$ days in a year. $(16$ marks$)$

b$)$ Comment on Events Management Ltd$$s liquidity position. $(4$ marks$)$