Answering Questions

  • Read each question carefully.
  • When you answer a question, your answer will automatically be saved.
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    • Numbers
    • One full stop as a decimal point if required
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              For example: -10234.35

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    part(s) in Section B
    .

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?

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