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... in a warehouse and more could be purchased from suppliers, which would lead to a lesser stock turnover. However the business could be losing out on benefits of external economies of scale such as bulk buying as they are buying on a smaller scale, as the more one buys from suppliers the cheaper these goods will become. CURRENT RATIO= Current assets Current liabilities 4305.59 / 250 = 17.2% This is strikingly high! This means that the is room for further investment into the business but just how much is not for certain yet as outside finance still may need to be required. ACID TEST= Current assets-stock Current liabilities 4305.59 - 2000 / 250 = 9.2% This ratio in comparison to the current ratio can be used to see how much of the current assets are liquid (cash) and how well this can compensate for the current liabilities i.e. if there are any evident cash flow problems. With C.A.T its ...