Wood Sparrow Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:
- Long-Term Assets £0.8M
- Inventory £0.7M
- Accounts Receivables £0.7M
- Bank Account £0.4M
- Cash £0.1M
- Accounts Payable £0.9M
- Long-term Bank Loan £2M
- Reserves £0.5M
- Share Capital £0.5M
- Revenue £10.8M
- Cost-of-Sales £9M
- Net Profit Margin £1M
- Purchases £5.1M
What is Wood Sparrow’s Current Ratio (working capital ratio)?
Select ONE answer:
- 1.43
- 1.40
- 2.11
- 3.94
- 1.33
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 – (£0.7M + £0.7M + £0.4M + £0.1M) / £0.9M = 2.11
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