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• Numbers
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Warringah PLC case – OTQ case

The following scenario relates to questions 1–5.

Warringah PLC is a listed manufacturing company. Its summarised statement of financial position is given below.

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

 $m Non-current assets 580 Inventories 96 Trade receivables 27 Current asset investments 5 Cash and cash equivalents 3 131 711 Equity and liabilities$1 ordinary shares 500 Retained earnings 90 590 Non-current liabilities – loans 50 Trade and other payables 71 711
1. What is Warringah PLC's current ratio at 31 December 2020?
2. The finance controller of Warringah PLC is concerned about its current ratio. He is considering a number of actions that he hopes will enhance Warringah PLC’s current ratio.

Which of the following would increase Warringah PLC’s current ratio?

3. What is Warringah PLC’s acid test (quick) ratio at 31 December 2020? (Enter your answer to two decimal places)
4. The finance controller of Warringah PLC knows that the acid test ratio is below 1. Therefore he is planning the following two changes:Proposal 1: Offering a 2% early settlement discount to credit customers
Proposal 2: Delaying payment to all trade payables by one extra month

Using the options below, match the effect the proposals would have on the acid test ratio (tokens can used more than once)
A. Proposal 1
B. Proposal 2
5. Warringah PLC is a manufacturing company. Which of the following ratios would best assess the efficiency of Warringah PLC?