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IB Business Management HL 3.5.3 Liquidity Ratios Questions

Practise 3.5.3 Liquidity ratios in IB Business Management HL by connecting concepts to case evidence and decisions.

Syllabus
First assessment 2024
Course
Business management HL
Level
HL

Exam points

  • Calculate and interpret current ratio and acid test or quick ratio
  • Liquidity ratios measure ability to meet short-term liabilities

Learn this topic

Study 3.5.3—Liquidity ratios conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

IB Business Management HL 3.5.3 Liquidity Ratios Questions question 1

[Maximum number: 1]

Papel



Papel manufactures and sells paper bags. It pays cash for 80 % of its raw materials but, to remain competitive, it must sell on credit to all customers. Many debtors are not paying on time and creditors (suppliers) are increasing. The board of directors is concerned about Papel's liquidity position.

The finance manager has provided information from Papel's accounts.

Table 1: Selected information from Papel's accounts at 31 October 2018

Table 1: Selected information from Papel's accounts at 31 October 2018

Using information from Table 1:

calculate the current ratio for Papel for the end of October 2018.

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