FA Chapter 26 Questions Interpretation of Financial Statements
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Will there be a need to interpret these ratios or just calculation
In the exam we work it same, or just comment on ratio no numbers add?
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Dear John, is it not the formula for quick ratio : (current assets – inventory)/ current liabilities? In Q4, inventory is added (instead of subtracted).
Yes, that is the formula for the quick ratio. But question 4 does not ask for the quick ratio – it asks for the current ratio!!!
no dear, check the formula again. 2232/1890= 1.18 option A is correct
The answer to question 4 is NOT 1.18. The question asks for the current ratio (1.18 is the quick/acid-test ratio).
Sir,
How to calculate Receivable Turnover Ration from PL? I have faced a question some where else.
thanks in advance.
In future please ask this sort of question in the Ask the Tutor Forum, and not as a comment on a lecture.
It is the sales from the Statement of Profit or Loss divided by the Receivables from the Statement of Financial Position.