Accounting 0452 · IGCSE · Interpretation of accounting ratios

Interpretation of accounting ratios — practice question

A company gave the following details for its current ratio: year 1: $2.3:1$; year 2: $2.4:1$; year 3: $2.5:1$. What could account for the changes in the ratio?

  • AInventory is decreasing.
  • BOther payables are increasing.
  • COther receivables are increasing.
  • DTrade receivables are decreasing.

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