If You Were Given the Components of Current Assets and of Current

question 126

Multiple Choice

If you were given the components of current assets and of current liabilities, what ratios could you calculate?

• A)Profitability ratios
• B)Capital structure ratios
• C)Asset management ratios
• D)Liquidity ratios

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Definitions:

Inventories

Resources allocated for trading within normal business practices, including those being prepared for sale or as materials and supplies meant for depletion during production or in service rendering.

AASB 10

The Australian Accounting Standards Board regulation that sets out the requirements for preparing and presenting consolidated financial statements when an entity controls one or more other entities.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as if the group were a single economic entity.

Intragroup Transactions

Transactions that occur between entities within the same group of companies, often leading to the need for elimination adjustments in consolidated financial statements.