Question 5 Part A The main ratio used by many financial analysts to examine a company's short-term liquidity risk is the current ratio. However, there are a number of problems that arise when this ratio is used to examine short-term liquidity risk that may make the current ratio less useful than initially thought. Required: Discuss the interpretative problems of using the current ratio. (10 marks) Part B There are circumstances when the management of a company may want to report a higher profit figure than what the company actually earns in a financial period. Required: (a) Outline 5 techniques that may be used by the management to report a higher profit. (5 marks) (b) Assess the impact(s) of these techniques to report a higher profit in one year on the profit figures in subsequent year(s). (5 marks) (Total 20 marks)