Preston runs a toy shop. She is concerned with the liquidity position of her firm as she
Question:
Preston runs a toy shop. She is concerned with the liquidity position of her firm as she has heard that liquidity problems are one of the most frequent explanations for failure.
The following data are available:
(a) Calculate the current and acid test ratio based on the above data.
(b) Give a brief evaluation of the liquid position of the business to Preston.
Transcribed Image Text:
Inventory Trade receivables Bank Trade payables 14,500 8,409 3,200 9,310
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a Acid test ratio Current ratio b Factors to mention 125 280 Both ratios s...View the full answer
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