2.3.3.2b - Liquidity ratios and improvement

Use statements of financial position to calculate current ratio = current assets/current liabilities and acid-test ratio = (current assets − inventory)/current liabilities, interpret liquidity, and recommend ways to improve it.

Use b - liquidity ratios and improvement to connect the rule to the data and decision in the question.

This matters because b - liquidity ratios and improvement determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - liquidity ratios and improvement to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Liquidity ratios and improvement is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.