In analysing the financial statements of an entity, the following ratios were calculated: 2017 2016 Current ratio
Question:
In analysing the financial statements of an entity, the following ratios were calculated:
2017 | 2016 | |
Current ratio | 1.1:1 | 1.3:1 |
Quick ratio | 0.5:1 | 0.7:1 |
Receivables turnover | 30 days | 45 days |
Inventory turnover | 3 times | 4 times |
Profit margin | 10% | 7% |
Evaluate the entity’s liquidity.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Both current ratio and quick ratio have decreased from 2016 to 2017 indicating that the entitys abil...View the full answer
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Related Book For 
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett
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