A-LevelAccountingAnalysis and communication of accounting information9706/12 · Oct/Nov 2009 · Q201 Mark
A bank manager has reviewed the financial statements of a business. He notes that the liquidity ratio has fallen but that the sales for the year have remained constant. What explains this fall in the liquidity ratio?
Adecrease in stocks of finished goods
Bdecrease in the overdraft
Can increase in cash
Dan increase in trade creditors
✓ Correct answer
D: an increase in trade creditors
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