Discuss the importance of cash management in a business

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Question - The following table presents the long-term debt and shareholders' equity of Caledonian plc for March 2021. During the past year, the firm issued 20 million new ordinary shares at a total price of £52 million, and £16 million shares in new longterm debt. The company generated £14 million in net income and paid £8 million in dividends. Construct the statement of financial position for March 2022 reflecting the changes that occurred at Caledonian during the year.

Table 1: Long term debt and shareholders' equity

Long-term debt 60,000,000

Preference shares 18,000,000

Ordinary shares (£1 par value) 25,000,000

Capital surplus 49,000,000

Accumulated retained earnings 89,000,000

1. Explain the difference between book value and market value. Under standard accounting rules, it is possible for a company's liabilities to exceed its assets. When this occurs, the owner's equity is negative. Critically discuss whether this can happen with market values.

2. Discuss the importance of cash management in a business.

Reference no: EM133251550

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