ACCA FR · Chapter 14 · Question 10 of 15
Duiker Co has inventories of $300k, trade receivables of $250k, cash of $50k and trade payables of $400k. It has no other current assets or current liabilities. What are its current ratio and quick (acid test) ratio?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Current 1.5:1; quick 0.75:1
Explanation
Current ratio = current assets / current liabilities = (300 + 250 + 50) / 400 = 1.5:1. Quick ratio leaves out inventory because it is the least liquid current asset: (250 + 50) / 400 = 0.75:1.
More Statements of cash flows and interpretation of financial statements MCQs
- Q12Reedbuck Co has profit before interest and tax of $600,000 and finance costs of $150,000. It has interest-bearing debt of $2,000,000 and…
- Q13Oribi Co revalued its property upwards at the start of the year, while a competitor carries similar property at historical cost. All else…
- Q14Performance in a not-for-profit entity such as a charity is often assessed using 'value for money'. What are the three Es that make up…
- Q15Bushbuck Co has revenue of $4,000,000, profit before interest and tax of $600,000 and capital employed of $2,500,000. Which of the…
- Q1When preparing a statement of cash flows using the indirect method, how is an increase in trade receivables during the year treated?