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

Analysis and communication of accounting information — practice question

The financial information concerns two businesses. trade receivable turnover (days): X 90, Y 40 trade payable turnover (days): X 50, Y 70 liquid (acid test) ratio: X 3 : 1, Y 1 : 1 current ratio: X 4.5 : 1, Y 6.2 : 1 Which statement about how the two businesses’ performance compares is correct?

  • AX has better credit control system.
  • BX has higher profitability.
  • CY has better credit control system.
  • DY has higher profitability.

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