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2 marksFinancial Statements Analysis

CAPE Management of Business Unit 1 · 2018 · Paper 2 · Question 3(a)(i)

John and Joan Bogue run Basket and Things in MacArthur, producing straw and coconut products. Seeking to expand capacity to meet growing local and tourist demand, they seek a commercial bank loan. The bank officer requests a proposed debt-to-equity ratio and a 12-month monthly cash budget.

Define the term 'Debt-to-equity ratio'.

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Other parts of this question

  1. 3(a)(ii)Define the term 'Cash budget'.[2 marks]
  2. 3(b)Explain THREE limitations of using ratios to assess the financial health of a business.[9 marks]
  3. 3(c)Discuss THREE advantages Basket and Things could experience by preparing a monthly cash budget.[12 marks]

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