Chapter 10 - Ratio Analysis
This chapter look at how to monitor a business to see it it is profitable and it the business can pay back it debts
Learning Intentions
Success Criteria
1. Explain why the different stakeholders want to know the financial information of a business
2. Be able to define the different term in a Profit and Loss Account
3. Be able to define the different terms in a Balance sheet
4. Understand the limitations of financial information
5. Be able to calculate and interpret the different ratios for Profitability
6. Be able to calculate and interpret the different ratios for Liquidity
7. Be able to calculate and interpret the different ratios for the Debt/Equity Ratio
Syllabus
This section links with the syllabus under the following sections
4.5.5 - Calculate and interpret the main profitability and liquidity ratios and debt/equity
4.5.14 - Understand the importance of accountancy and business data in the monitoring of the business enterprise
Exam Tip
1. learn the ratios
2. Write down the formula
3. Fill in the figures
4. Calculate the answer
5. Comment on the answer (Compare to the figure given in the question
Learning Intentions
Success Criteria
1. Explain why the different stakeholders want to know the financial information of a business
2. Be able to define the different term in a Profit and Loss Account
3. Be able to define the different terms in a Balance sheet
4. Understand the limitations of financial information
5. Be able to calculate and interpret the different ratios for Profitability
6. Be able to calculate and interpret the different ratios for Liquidity
7. Be able to calculate and interpret the different ratios for the Debt/Equity Ratio
Syllabus
This section links with the syllabus under the following sections
4.5.5 - Calculate and interpret the main profitability and liquidity ratios and debt/equity
4.5.14 - Understand the importance of accountancy and business data in the monitoring of the business enterprise
Exam Tip
1. learn the ratios
2. Write down the formula
3. Fill in the figures
4. Calculate the answer
5. Comment on the answer (Compare to the figure given in the question