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Cambridge IGCSE Business Studies practice

Paper 1 structured question: Analysis of accounts

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Analysis of accounts

Exam-style question

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Paper 1Short Answer and Data Response1 marks

A company is facing cash flow issues due to low liquidity.

Description

Company Liquidity Situation

The company has high inventory levels and slow receivables collection.

  1. a

    State one reason why liquidity is important for this company

    Aim for approximately 1 distinct marking point.

    [1]

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Paper 1 structured question: Analysis of accounts

Paper 1Short Answer and Data Response3 marks

Data Table

Business Liquidity Ratios

Current Ratio and Quick Ratio of a Business

RatioValue
Current Ratio1.5
Quick Ratio1.2
  1. a

    Explain the significance of these liquidity ratios for the business

    Aim for approximately 3 distinct marking points.

    [3]