Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
PBG manufactures cars in country A. The Managing Director has been reviewing PBG’s financial statements. He is concerned about PBG’s liquidity position. Table 2 shows an extract from the balance sheet. The Managing Director stated: ‘New legal controls mean that all cars sold in country A will have to be electric by 2025. PBG must look for new markets for its existing cars while we develop new models.’ One possible move for PBG is to set up a joint venture with a car manufacturer in another country.
(a)[2]
What do we mean by ‘non-current liabilities’?
(b)[2]
Calculate PBG’s current ratio for 2019.
(c)[4]
Identify and explain one way that each of the following stakeholder groups could use PBG’s financial accounts:
Trade Payables (Creditors).
Shareholders.
(d)[6]
Identify and explain one advantage and one disadvantage for PBG of setting up a joint venture.
(e)[6]
Do you think the Managing Director is justified in being worried about PBG’s liquidity position? Support your judgement by referring to suitable ratios.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Debts that must be repaid after more than one year” …