Day: January 6, 2018

Woodpecker Ltd provided a list of its assets and liabilities as at 31 December 2016 as follows.

• Long-Term Assets £300k
• Inventory £85k
• Accounts Receivables £40k
• Bank Account £10k
• Cash £5K
• Accounts Payable £65k
• Long-term Bank Loan £700k
• Reserves £125k
• Share Capital £100kRevenue £3,800k
• Cost-of-Sales £2,400k
• Net Profit Margin £300k
• Purchases £1,200k

What is Woodpecker’s Current Ratio (working capital ratio)?

Select ONE answer:

1. 2.53
2. 3.84
3. 2.15
4. 8.33
5. 4.43

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 3 – (£85k + £10k + £5k + £40k) / £65k = 2.15

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