Part b)The Super Cheap Auto Group Limited has a combination of both forms of finances that is longterm and short term. From the cash flow statement, it can be noticed that company is regular inpayment of its liabilities. Along with principal amount the company has also paid interestamount on time. The company has earned sufficient profits, which indicates that company is alsoregular in paying the dividends to its shareholders. But at the same time company is not incondition to pay off its short term debts on time. From the cash flow from operating activity itcan be identified that there is increase in the borrowing cost during the year 2007 which indicatesthat the company has made extra borrowings during the year.Part c) Inventory turnover ratio is the ratio that shows how many times the company's inventory is soldand replaced for a period of time. Inventory turnover ratio is calculated as follows- Inventory turnover ratio = sales/average inventory Hence, the inventory turnover ratio of Super Cheap Auto Group Limited during the year 2007 is1.659 which has decreased from the previous year which was 1.66.Working Capital Management enables to determine that the company is able to continue itsoperations and has sufficient cash inflow and outflow to satisfy companies’ requirements. TheCompanies receipt has increased in year 2007 as compared to previous year from 581,016 to689,172. The net working capital of the company is positive, which indicates that company isable to continue its operations, it represents that short term to current assets are not secured bylong term assets.Part d)No, the Super cheap Auto should not borrowed extra fund as the current debt of the company ishigh and borrowing the extra fund will create impact over the solvency position of the company.Also there is increase in interest cost of the company from the previous year and borrowing extra4 | Page

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