The working capital accounts of Queen Chana, a retailer, are as follows:

Year 2018 2019 2020

Cash $1,000 $1,500 $2,000

A/R 2,000 4,000 6,000

Inventory 2,000 4,500 8,000

Current assets 5,000 10,000 16,000

Account payable 2,000 3,500 4,500 Short term debt 500 1,500 3,500

Current Liabilities 2,500 5,000 8,000

Required

a) For years 2018 to 2020 calculate Queen Chanas

i) Current ratio ii) Quick ratio iii) Cash ratio (9 Marks)

b) Describe the other useful indicators of the firms liquidity that can be calculated from the data given. (5 Marks)

c) Using the results of parts a and b, discuss the limitations of the current ratio as a measure of liquidity (5 Marks)

d) List other ratios that would be useful to confirm your analysis. State what you would expect these ratios to show (6 Marks)

(Total 25 Marks)