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

Analysis and communication of accounting information — practice question

Wiggins has supplied the following summary financial information for the year ending 30 April 2017.
(a)[2]

State two drawbacks of using ratio analysis when analysing a business's performance.

(b)[4]

Calculate the current ratio to two decimal places.

(c)[1]

Calculate the liquid (acid test) ratio to two decimal places.

(d)[4]

Calculate the rate of inventory turnover (times).

(e)[4]

Advise Wiggins whether the loan should be accepted. Justify your answer.

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