liquidicity 0.0 / 5 ? Business StudiesFinancial PlanningASEdexcel Created by: aleyshea darCreated on: 22-03-16 15:09 liquidicity how much cash a business has and how easy it is to pay debts 1 of 15 statement of financial position shows the assets, liabilities and net worth of a business on a given date 2 of 15 assets what a business owns e.g. buildings 3 of 15 liabilities what a business owes e.g. bank loan 4 of 15 current ratio current assets / current liabilites 5 of 15 acid test ratio current assets - stock / current liabilities 6 of 15 fixed asset are intended to be held for more than one year e.g. buildings, land, machinary and vehicles 7 of 15 current assets cash or assets that will be turned into cash, within the year e.g. stock, debtors, bank, cash 8 of 15 what the acid test ratio answer means this means for every £1 owed by the business they have to pay (answer) in current assets minus stock to pay the debt 9 of 15 what the current ratio answer means this means for every £1 owed by the business they have (answer) in current assets to pay the debt. 10 of 15 inventory another word for stock 11 of 15 ways to improve business liquidicity reduce current liabilities e.g. pay off loans the business has 12 of 15 ways to improve business liquidicity getting money off debtors (people who owe the business money) quciker 13 of 15 ways to improve business liquidicity reduce the stock levels by using JIT. this reduces space needed and reduces storage costs 14 of 15 working capital current assets - current liabilities 15 of 15
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