As treasury assistant at Delicious cakes.com, you have been asked to prepare a report explaining liquidity management
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Question:
As treasury assistant at Delicious cakes.com, you have been asked to prepare a report explaining liquidity management using the Statement of profit and loss and the Statement of Financial Position.
Your answer should include calculations to support your report as well as the following areas:
- Define Liquidity
- Three main sources of liquidity
- Working capital cycle
- Explain what liquid assets are with examples
- Overtrading
- Overcapitalization
Statement of profit or loss (Extract) | ||
AED | AED | |
Sales | 500,000 | |
Less: Cost of Sales | ||
Opening inventory | 120,000 | |
Purchases | 300,000 | |
420,000 | ||
Less: Closing inventory | (80,000) | |
340,000 | ||
Gross profit | 160,000 |
Statement of Financial position (Extract) | ||
AED | AED | |
Current Assets | ||
Inventory | 80,000 | |
Receivables | 93,000 | |
Cash | 17,000 | |
190,000 | ||
Current Liabilities | ||
Payables | 55,000 | |
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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