Fresh Fruity Limited (FFL) started up a business 5 years ago producing fresh fruit drinks. FFL has developed a reputation amongst its customers for the freshness, originality, and reliability of its drinks. The brand value of FFL is extremely high in the market. Despite the economic slowdown, the company registered good sales growth. At the recent board meeting, the management has analyzed the financial position for future internal or external growth opportunities. The production manager has recommended acquiring fruit farms which will help FFL to have control over the supply of raw materials and its quality. The following key figures are taken from the books of FFL for the year ended 31 March 2020.
| Machinery | $1500 | Stock | $200 |
| Buildings | $4000 | Debtors | $160 |
| Equipment | $300 | Cash | $120 |
| Creditors | $200 | Bank overdraft | $40 |
| Share capital | $2000 | Loan Capital | $2000 |
| Retained profit | $1040 |
Questions:
- With reference to FEL, explain the term external growth [ 2 marks]
- Explain the term ‘intangible assets’ [ 2 marks]
- Distinguish between fixed assets and current assets [ 4 marks]
- Using the figures given in the table 1, construct a balance sheet for EFL for the year ending 31 March 2021 [ 6 marks]
- Calculate the current ratio and quick ratio [ 4 marks]
- Comment on the liquidity position of EFL [ 2 marks
