Page 289 - F3 -FA Integrated Workbook STUDENT 2018-19

Interpretation of financial statements

Liquidity and efficiency ratios

3.1 Current ratio: calculation

Current assets
——————

Current liabilities

3.2 Quick ratio (or acid test): calculation

Current assets (excluding inventory)
———————————————
Current liabilities

3.3 Current/quick ratio: reasons for movement

 increase/decrease in cash balance – why may this have happened?

 increase/decrease in inventory – why may this have happened?

 increase/decrease in receivables – why may this have happened?

 increase/decrease in payables – why may this have happened?

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