O-LevelAccountingAnalysis and interpretation7707/11 · May/June 2021 · Q311 Mark

The current ratio of X is 2:1. The current ratio of Y is 1.3:1. What does a comparison of these ratios show?

AX has fewer liabilities than Y.

BX has more liquidity than Y.

CY has fewer current assets than X.

DY has more inventory than X.

✓ Correct answer

B: X has more liquidity than Y.

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Topic: Analysis and interpretation, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2021 Paper 1 Variant 1, question 31.

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