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

Analysis and communication of accounting information — practice question

N Limited supplied the following information for the year ending 31 August 2022.
(a)[4]

Calculate the following efficiency ratios, and show the formula you use.

(b)[4]

Calculate the following liquidity ratios to two decimal places, and show the formula you use.

(c)[5]

Advise the directors on whether they are right to be satisfied or not. Justify your view by referring to the efficiency ratios and liquidity ratios in (a) and (b).

(d)[2]

State two limitations of using accounting ratios when comparing the results of two businesses.

Worked solution & mark scheme

This 15-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Trade receivables turnover equation: Trade receivables / Credit sales \times 365” …

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