Paper 2 · Ratio Analysis
A manufacturer struggling to pay its short-term debts would show this most clearly in which ratio?
Areturn on capital employed
Bthe acid test ratio
Cthe gross profit margin
Dgearing
Explanation: The acid test compares current assets excluding stock with current liabilities, which is precisely the test of whether debts falling due can be met without selling inventory. Margins and return on capital measure profitability, and gearing measures long-term financial structure.
Derived from ZIMSEC Business Enterprise Skills Paper 2, Specimen Paper, Q5