Wood Pigeon Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:
- Long-Term Assets £400k
- Inventory £185k
- Accounts Receivables £140k
- Bank Account £110k
- Cash £50K
- Accounts Payable £165k
- Long-term Bank Loan £800k
- Reserves £250k
- Share Capital £200k
- Revenue £4,800k
- Cost-of-Sales £3,400k
- Net Profit Margin £600k
- Purchases £1,800k
What is Wood Pigeon’s Liquidity capital ratio (acid test or quick ratio)?
Select ONE answer:
- 18.38
- 10.65
- 2.93
- 19.86
- 1.82
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 – (£140k + £110k + £50k) / £165k = 1.82
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