Liquidity Ratios Quiz

Where is the information for liquidity ratios primarily drawn from?

• Statement of financial position

• Balance sheet

• Cash flow statement

• Income statement

Which of the following are current assets?

• Inventories and income

• Cash, stock, and debtors

• Cash, stock, and overdraft

• Cash, stock, and creditors

What is the formula for calculating the current ratio?

• Current assets / Long-term liabilities

• Current assets / Current liabilities

• Total assets / Total liabilities

• Total liabilities / Current assets

What does a current ratio of less than 1 suggest about a business?

• The business is in a good liquidity position

• The business is competitive in terms of liquidity

• The business is struggling to pay its current liabilities

• The business has too much capital invested

What is the acid test ratio also known as?

• Debt ratio

• Profitability ratio

• Efficiency ratio

• Quick ratio

What is the main difference between the current ratio and the acid test ratio?

• The inclusion of inventories in current assets

• The elimination of current assets

• The elimination of trade debtors

• The inclusion of long-term liabilities

What should be considered when evaluating liquidity ratios?

• The marketing strategy

• The type of business and industry

• The location of the business

• The number of employees