Accounting 9706 · AS & A Level · Analysis and communication of accounting information

Analysis and communication of accounting information — practice question

Haniya wanted to compare several ratios for her business. Information is given for the year ended 30 November 2021 and an extract from the statement of financial position at 30 November 2022, together with credit sales and credit purchases for the year ended 30 November 2022.
(a(i))[2]

Calculate the acid test ratio (to two decimal places) for Haniya’s business at 30 November 2022.

(a(ii))[2]

Calculate the trade receivables turnover (days) for Haniya’s business at 30 November 2022.

(a(iii))[2]

Calculate the trade payables turnover (days) for Haniya’s business at 30 November 2022.

(b)[2]

Explain the importance of the acid test ratio to a business.

(c)[2]

Identify two ways in which a business owner could raise the acid test ratio.

(d)[5]

Discuss how the trade receivables turnover (days) ratio and the trade payables turnover (days) ratio changed for Haniya’s business during the year ended 30 November 2022.

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