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 Liquidity capital ratio (acid test or quick ratio)?
Select ONE answer:
- 2.53
- 3.84
- 2.15
- 8.33
- 0.85
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 5 – (£10k + £5k + £40k) / £65k = 0.85
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