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Frank Wright runs a small bakery. He is concerned with the liquidity position of his firm as he has heard that liquidity problems are

 

Frank Wright runs a small bakery. He is concerned with the liquidity position of his firm as he has heard that liquidity problems are one of the most frequent explanations for business failure. The following data is available: Particulars Inventory Cash Sundry Debtors |Amount 1,50,000 50,000 300,000 350,000 30000 30000 Creditors Bills Receivable Bank Overdraft Required Q1. Calculate the current ratio and liquidity (acid test) ratio based on the above data. Q2. Give a brief evaluation of the liquidity position of Frank Wright's bakery.

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