CAIE A-Level Business 10.2.1 Liquidity ratios

Practise analysing liquidity problems and evaluating ways a business could improve its ability to meet short-term debts.

Exam points

analyse two methods to improve liquidity, linking each to cash or current liabilities
evaluate the best liquidity improvement method using the business's case constraints

[Maximum number: 1]

Refer to Table 1.1. Calculate, for 2023, the current ratio.

Refer to Table 1.1. Calculate, for 2023, the current ratio.

Responses may include:

CR = Current Assets / Current Liabilities
0.6 / 0.8=0.75: 1(1)

Accept 0.75 OR 3:4 or $\frac{3}{4}$ (1)

Note:

0.75 m or $0.75 / 1 \mathrm{~m}$ (0)

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10.2.1—Liquidity ratios question 1