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Terry
0450-19-O-N-13-4e
Chan
TOPIC QUESTION - PAPER 1
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Chan
May 17, 2026 at 7:36:21 AM
Oct/Nov 2019
Version 3
5.0 Financial Information and Decisions
5.5 Analysis of Accounts
YOUR ANSWER
The acid test ratio reduced from 0.4 to 0.3, showing liquidity reducing in 2019. This might indicate that inventory has increased due to poor sales, and less ability of PBG paying creditors without selling more inventory. The managing director should be worried as PBG will see an increase in inventory when they produce newer electric car models due to new legal controls in country A, further reducing liquidity unless PBG sells off all old models soon.
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