Luxury Destinations owns three hotels in country X. The business spends a lot of money on staff training. The Finance Director is pleased with the financial position of the business. ‘However, the appreciation of our country's currency and the Government's plan to increase taxes might cause problems to our business in the future' he said. Table 1: Luxury Destinations financial information ($000s) | | 2011 | 2012 | |---|---|---| | Gross profit | 195 | 220 | | Net profit | 30 | 60 | | Fixed assets | 300 | 350 | | Current assets | 60 | 50 | | Current liabilities | 60 | 75 |

1. (a)What is meant by ‘appreciation of our country's currency'?[2]
2. (b)Calculate the current ratio in 2012.[2]
3. (c)Identify and explain two problems that an increase in taxes could cause for Luxury Destinations.[4]
4. (d)Identify and explain three benefits for Luxury Destinations of training its employees.[6]
5. (e)Do you think the Finance Director is right to be pleased with the financial position of the business? Justify your answer.[6]

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