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IGCSE Business Studies7.4. Liquidity ratiosTopic Practice

7.4. Liquidity ratios

CAIE IGCSE Business Studies 7.4. Liquidity ratios question practice helps you revise this syllabus point with the course map in view. Use this page to focus on one topic, check the style of questions available, and connect each attempt back to the knowledge area it is testing.

EduNinja keeps Business Studies practice aligned to CAIE, so you can move from topic review into exam-style question bank work without losing the syllabus structure. Start with a small set, mark the weak steps, then return to nearby topic links when a definition, graph, calculation, or explanation needs repair.

Question 1(b)

[Maximum number: 2]

WFT is a primary sector business which harvests timber (wood) from trees. The Operations Manager knows there are many legal controls over business activity affecting the environment. WFT has 30 employees and uses a lot of technology to process the timber. The business is always considering ways to increase added value. WFT often needs finance. An extract from WFT's statement of financial position is shown in Table 1.1.

Table 1.1

Table 1.1

Calculate WFT's current ratio in 2024. Show your working.

Working:

Final answer:

Question 2(b)

[Maximum number: 2]

WFH produces hats and sells them to a mass market. It holds a high level of inventory. The Managing Director is concerned about the liquidity of the business and has been analysing WFH's financial statements. An extract is shown in Table 2.1. The Managing Director thinks that the business might fail. Other stakeholder groups might also be interested in WFH's financial statements.

Table 2.1

Table 2.1

Calculate WFH's acid test ratio for 2022. Show your working.

Working:
Final answer:

Question 3(b)

[Maximum number: 2]

CLN is a public limited company. It sells a range of electrical products such as televisions and computers. The Managing Director has been analysing CLN's accounts. An extract is shown in Table 3.1. He said: 'We need more finance. Last year CLN made a loss of $250 m\$ 250 \mathrm{~m}. I blame increased competition from e-commerce.' CLN plans to close 30 of its 120 shops. This decision will affect many of its stakeholders including the local communities. The number of sales from each shop will be used to decide which shops to close.

Table 3.1

Table 3.1

Calculate the acid test ratio. Show your working.

Question 3(b)

[Maximum number: 2]

HRO manufactures children's toys. It is a private limited company. The main objective of HRO 's shareholders is to increase profit. This might conflict with the objectives of other stakeholder groups, including its 30 suppliers. HRO's Managing Director knows that market research can help when making marketing decisions. The Finance Director is preparing HRO's statement of financial position. An extract is shown in Table 3.1.

Table 3.1

Table 3.1

Calculate HRO's current ratio. Show your working.

Working:
Final answer:

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