Calculation and understanding of accounting ratios: แบบฝึกหัด

A business has Current Assets of \(\$60,000\) and Current Liabilities of \(\$25,000\). Calculate the Current Ratio.

A business had credit sales of \(\$450,000\) for the year. Its Trade Receivables at the beginning of the year were \(\$40,000\) and at the end of the year were \(\$50,000\). Calculate the Trade Receivables Turnover in days, assuming 365 days in a year.

Which accounting ratio is used to measure the average time taken by a business to collect debts from its credit customers?

A business has the following balances in its statement of financial position:
Current assets (including inventory of \(\$20,000\)): \(\$50,000\)
Current liabilities: \(\$15,000\)

What is the liquid (acid test) ratio?

A business provides the following data:
Current assets (including inventory): \(\$80,000\)
Inventory: \(\$25,000\)
Current liabilities: \(\$40,000\)
Calculate the liquid (acid test) ratio and state whether it meets the generally accepted 1:1 benchmark.

Zainab Trading operates a retail business. The following financial information is available for two consecutive years:

Required:

(a) Calculate the following ratios for both 2022 and 2023, showing your workings:

• Gross margin
• Profit margin
• Current ratio
• Liquid (acid test) ratio
• Return on Capital Employed (ROCE)

(b) Based on your calculations, comment on Zainab Trading's profitability and liquidity performance between 2022 and 2023. Suggest one way Zainab Trading could improve its liquidity.