(a) Identify the main users of the financial statements and describe the adequacy of the general purpose financial statements to cater for the reasonable needs of its major users.
Plant Utilization Budget is budget prepared for the estimation of plant capacity to meet the budgeted production during the budgeted period. It is a forecast of plant capacities available for fulfilling production requirements as specified in the production budget. This budget is expressed in working hours or other convenient units.
The most widely used measure of liquid position of an enterprise is the current ratio, that is, the ratio of the firm’s current assets to current liabilities.
It is calculated by dividing current assets by current liabilities:
liquid (or) quick ratio is a measurement of a firm’s ability to convert its current assets quickly into cash in order to meet its current liabilities. It is a measure of judging the immediate ability of the firm to pay-off its current obligations.