2.3.2 Liquidity​

Question 1

calculate Acid test ratio

Answer 1

(Current assets –Inventories) / Current
liabilities

Question 2

Calculate Current Ratio

Answer 2

Current assets / Current liabilities

Question 3

calculate Working capital

Answer 3

Current assets – Current liabilities

Question 4

ways to improve liquidity​

Answer 4

Use of overdraft facilities ​

Negotiate additional short-term or long-term loans ​

Encourage cash sales and sell off stock ​

Sale and leaseback ​

Introduce fresh capital​