Ace Cambridge Accounting

Ace Cambridge Accounting Quality accounting tutoring to O Level & IGCSE Students aiming to enhance understanding & confidence.

Test your knowledge — can you solve this quiz?
15/08/2026

Test your knowledge — can you solve this quiz?

Accounting students learn a concept on the Go! Return on Capital Employed
15/08/2026

Accounting students learn a concept on the Go! Return on Capital Employed

Rate of inventory turnover?
25/07/2026

Rate of inventory turnover?

Memorization vs critical thinking - Memorizing is not enough know the logic.
24/07/2026

Memorization vs critical thinking - Memorizing is not enough know the logic.

One of the most repeated question in exams - Why we calculate - Acid Test Ratio? Different from current Ratio? - lets fi...
23/07/2026

One of the most repeated question in exams - Why we calculate - Acid Test Ratio?

Different from current Ratio? - lets find out...

Provision for doubtful debts - Why?
20/07/2026

Provision for doubtful debts - Why?

Current Ratio - Working Capital Ratio - Both for business owners & accounting learners.
18/07/2026

Current Ratio - Working Capital Ratio -

Both for business owners & accounting learners.

7707 O-Level / 0452 IGCSE · ACE IN 30 SECONDSLevel up your accounting skills while you scroll.Liquidity Ratios: Can the ...
16/07/2026

7707 O-Level / 0452 IGCSE · ACE IN 30 SECONDS
Level up your accounting skills while you scroll.

Liquidity Ratios: Can the business pay its short-term debts?

WHAT IS LIQUIDITY?
The ease and speed with which assets can be turned into cash.

RATIO 1
Current Ratio
(Working Capital Ratio)
Current Assets: Current Liabilities
Measures ability to meet current liabilities.
Satisfactory range: 1.5 : 1 to 2 : 1
Over 2:1 may indicate poor management of current assets

RATIO 2
Liquid (Acid Test) Ratio
Excludes inventory — not a liquid asset
Current Assets - Inventory : Current Liabilities
Inventory excluded because it needs to be sold AND collected — 2 steps from cash.
Satisfactory range: 0.7 : 1 to 1 : 1
1:1 means liabilities can be met without selling inventory

EXAM TIP
Key difference: Acid Test EXCLUDES inventory.
Always state the satisfactory range in your answer!

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3 efficiency ratios answered - ACE IN 30 SECONDSInventory, Receivables and Payables Turnover7707 O-Level / 0452 IGCSE ·R...
11/07/2026

3 efficiency ratios answered - ACE IN 30 SECONDS
Inventory, Receivables and Payables Turnover
7707 O-Level / 0452 IGCSE ·

RATIO 1
Rate of Inventory Turnover
Cost of Sales / Average Inventory (in times)
Measures how many times inventory is sold and replaced in a period.
Higher rate = inventory selling faster = more efficient.
Answer expressed in TIMES

RATIO 2
Trade Receivables Turnover
How long do customers take to pay?
Trade Receivables / Credit Sales x 365
Measures average days credit customers take to pay their accounts.
LOWER days = customers paying faster = better!
Answer expressed in DAYS

RATIO 3
Trade Payables Turnover
How long does the business take to pay suppliers?
Trade Payables / Credit Purchases x 365
Measures average days the business takes to pay credit suppliers.
Paying too late risks losing supplier credit!
Answer expressed in DAYS

Always show your working — even a wrong answer earns marks!

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