Accounts and finance

Table of Contents

1. Topic pack - Accounts and finance - introduction
2. 3.1 Sources of finance - notes
3. 3.1 Sources of finance - questions
4. 3.2 Investment appraisal - notes
5. Investment appraisal
6. 3.2 Investment appraisal - questions
7. 3.3 Working capital - notes
8. 3.3 Working capital - questions
9. 3.4 Budgeting - notes (HL only)
10. 3.4 Budgeting - questions
11. 3.5 Final accounts - notes
12. 3.5 Final accounts - questions
13. 3.5 Final accounts - simulations and activities
14. 3.6 Ratio analysis - notes
15. 3.6 Ratio analysis - questions
16. 3.6 Ratio analysis - simulations and activities
    1. DragIT - Profitability ratios
    2. DragIT - Build the profitability ratios
    3. DragIT - Liquidity ratios
    4. DragIT - Build the liquidity ratios
    5. DragIT - Balance sheet
    6. DragIT - Efficiency ratios
    7. DragIT - Build the financial efficiency ratios
    8. DragIT - Build the shareholder ratios
    9. DragIT - Gearing ratio
    10. DragIT - Build the gearing ratio
    11. DragIT - Ratio analysis
17. Printable version

DragIT - Liquidity ratios

In the image below, try clicking on the arrows beside each variable to see the impact of changes on the liquidity ratios. Once you have done that, you may like to have a go at the questions below.

1

Stock changes - acid test ratio When stocks increase the value of the acid test ratio will fall. a) True b) False Yes, that's correct. The statement is true. When stocks increase the top half of the acid test ratio (current assets less stock) will decrease. This will reduce the value of the acid test ratio.No, that's not right. The statement is true. When stocks increase the top half of the acid test ratio (current assets less stock) will decrease. This will reduce the value of the acid test ratio.Your answer has been saved.

2

Stock changes - current ratio When stocks increase the value of the current ratio will fall. a) True b) False Yes, that's correct. The statement is false. When stocks increase the top half of the current ratio (cash, debtors and stock) will increase. This will increase the value of the current ratio.No, that's not right. The statement is false. When stocks increase the top half of the current ratio (cash, debtors and stock) will increase. This will increase the value of the current ratio.Your answer has been saved.

3

Current ratio Which of the following is the correct formula for the current ratio? a) Current liabilities divided by current assets b) Current assets less stock divided by current liabilities c) Net assets divided by current liabilities d) Current assets divided by current liabilities Please select an answerNo, that's not right. This is the right variables, but the formula is the wrong way up.No, that's not right. This is the formula for the acid test ratio.No, that's not right. This isn't the formula for any ratio.Yes, that's correct. The current ratio is calculated from the formula current assets divided by current liabilities.