Day: March 19, 2018

Wood Angel Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:

• Long-Term Assets £400k
• Inventory £385k
• Accounts Receivables £340k
• Bank Account £210k
• Cash £50K
• Accounts Payable £365k
• Long-term Bank Loan £1800k
• Reserves  £250k
• Share Capital £200k
• Revenue  £5,800k
• Cost-of-Sales  £4,400k
• Net Profit Margin  £600k
• Purchases  £2,800k

What is Wood Angel’s Liquidity capital ratio (acid test or quick ratio)?

Select ONE answer:

1. 11.43
2. 21.40
3. 2.93
4. 31.94
5. 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 – (£340k + £210k + £50k) / £365k = 1.64

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