(4) Liquidity Ratios

A Business Has The Following:

Fixed Assets = £6000

Current Assets = £2000

Inventory = £1000

Current Liabilities = £500

Calculate It's Current Ratio

• 1 : 4

• 1 : 5

• 1 : 2

• 1 : 3

• 1 : 6

A Business Has The Following:

Fixed Assets = £6000

Current Assets = £2000

Inventory = £1000

Current Liabilities = £500

Calculate It's Liquid Capital Ratio

• 1 : 2

• 1 : 12

• 1 : 4

• 1 : 12.5

• 1 : 8

A Business Has The Following:

Fixed Assets = £20,000

Current Assets = £4,620

Inventory = £3,321

Current Liabilities = £2,000

Calculate It's Liquid Capital Ratio

• 1 : 0.64

• 1 : 0.65

• 1 : 0.63

• 1 : 0.66

• 1 : 0.62

A Business Has The Following:

Fixed Assets = £20,000

Current Assets = £4,620

Inventory = £3,321

Current Liabilities = £2,000

Calculate It's Current Ratio

• 1 : 2.31

• 1 : 2.32

• 1 : 2.30

• 1 : 2.33

• 1 : 2.34

A Business Has The Following:

Fixed Assets = £12,050

Current Assets = £13,500

Inventory = £6,040

Current Liabilities = £7,000

Calculate It's Current Ratio

• 1 : 1.93

• 1 : 1.94

• 1 : 1.92

• 1 : 1.91

• 1 : 1.90

A Business Has The Following:

Fixed Assets = £12,050

Current Assets = £13,500

Inventory = £6,040

Current Liabilities = £7,000

Calculate It's Liquid Capital Ratio

• 1 : 1.06

• 1 : 1.05

• 1 : 1.04

• 1 : 1.03

• 1 : 1.02

What is the correct definition of Positive Liquidity

• A business has enough cash to pay off their liabilities.

• A business does not have enough cash to pay off their liabilities.

• A business has enough fixed assets to sell in order to pay off their current liabilities

• A business has a greater amount of fixed assets than current assets.

• A business has more money going going to creditors than it is receiving from debtors.

What is the correct definition of Poor Liquidity

• A business has enough cash to pay off their liabilities.

• A business does not have enough cash to pay off their liabilities.

• A business has enough fixed assets to sell in order to pay off their current liabilities

• A business has a greater amount of fixed assets than current assets.

• A business has more money going going to creditors than it is receiving from debtors.

Identify the correct formula for the current ratio.

• Current Liabilities / Current Assets

• Current Assets / Current Liabilities

• Current Liabilities / (Current Assets - Inventory)

• (Current Assets - Inventory) / Current Liabilities

Identify the correct formula for the Liquid Capital Ratio.

• Current Liabilities / Current Assets

• Current Assets / Current Liabilities

• Current Liabilities / (Current Assets - Inventory)

• (Current Assets - Inventory) / Current Liabilities