QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

45.

The current ratio for an industry is 3.2. Data for a firm in the industry is presented below:

As at December 31

£ ‘000s

Cash

200

Accounts receivable

350

Inventory

1,250

Accounts payable

300

Taxes payable

200

600

Installment loan payable, due in three equal annual

payments on June 30.

Using the current ratio, when compared with the industry, the firm is best described as being:

A. as liquid.

B. less liquid.

C. more liquid.