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Working capital cycle

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Working capital cycle

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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    Posts
  • March 14, 2023 at 8:23 pm #681315
    menpagalhoon
    Participant
    • Topics: 17
    • Replies: 8
    • ☆

    Xena has the following working capital ratios:

    20X9 20X8

    Current ratio 1:2:1 1:5:1

    Receivables days 75 50

    Payables days 30 45

    Inventory turnover 42 35

    Which of the following statements is true?

    Correct analysis: Xena is suffering from a worsening liquidity position in accounting year 20X9.

    Confusion: How do I compare current ratios in this question? Is 1:2:1 less than 1:5:1 or more?

    March 15, 2023 at 9:35 am #681349
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 52452
    • ☆☆☆☆☆

    I don’t know which book you are using, but the ratios should be typed as 1.2:1 and 1.5:1, which means ratios of 1.2 and 1.5.

    1.2 is lower than 1.5.

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