SECTION-B Q 5. Read case study and answer the following questions. (10 marks) Copy Cat (CC) manufactures and sells plastic bags. It pays cash for 80% of its raw materials but to remain competitive, it must sell on credit to all customers. Many debtors are not paying on time and creditors (suppliers) are increasing. The board of directors is concerned about CC's liquidity position. The new accountant produced the below given information about financial positon of business, but the entire figures were placed under different headings. Table -1 Financial Manager has provided information form CC's accounts FIXED ASSETS Cash 5000 Machinery and equipment 63000 Debtors 2000 CURRENT ASSETS Creditors 3300 stock 1330 CURRENT LIABILITIES Long term liability 2800 Over draft 3500 EQUITY Share capital 60 000 Retained profit 1730 Using information from Table 1 a. Construct fully labelled EDITED Balance sheet for CC for the year. (1X6=6) b. Distinguish between current asset and current liabilities. (2x1=2) C. Calculate current ratio and analyze financial position of CC. (2x2=2) Profitability ratios Gross profit margin= gross profit -x100 sales revenue Net profit margin net profit before interest and tax sales revenue x 100 Return on capital employed (ROCE) - net profit before interest and tax x100 capital employed where capital employed =loan capital (or long-term liabilities) + share capital+retained profit Current ratio = current assets current liabilities current assets-stock Acid test (quick) ratio =- current liabilities