Cambridge IGCSE Business Studies practice

Paper 1 structured question: Analysis of accounts

Try the question first, then check the answer and practise the same topic again.

At a glance

Paper

Marks

Topic

Analysis of accounts

Exam-style question

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Paper 1Short Answer and Data Response3 marks

A business has a current ratio of 1.5 and a quick ratio of 1.2.

Data Table

Current Ratio and Quick Ratio of a Business

Ratio	Value
Current Ratio	1.5
Quick Ratio	1.2

a
Explain the significance of these liquidity ratios for the business
Your answer
Aim for approximately 3 distinct marking points.
[3]

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Paper 1Short Answer and Data Response1 marks

Description

The company has high inventory levels and slow receivables collection.

a
State one reason why liquidity is important for this company
Your answer
Aim for approximately 1 distinct marking point.
[1]