Cambridge AS & A Level Accounting
1.6.2Calculation and evaluation of ratios
Calculation and evaluation of ratios in Cambridge AS & A Level Accounting: what the syllabus expects you to know, the learning objectives and how to practise.
Subtopic90 practice questions4 lessons
Overview
Candidates must use the formulae in the appendix to section 3 (reproduced in the syllabus); no other formulae are accepted.
Learning objectives
What the syllabus expects you to be able to do.
- 1.6.2.1Calculate profitability (gross profit margin, mark-up, profit margin, ROCE, expenses to revenue), liquidity (current and acid test) and efficiency ratios (non-current asset turnover, receivables, payables and inventory turnover in days, rate of inventory turnover).
- 1.6.2.2Evaluate profitability, liquidity and efficiency by interpreting ratios and suggest measures to improve them.
- 1.6.2.3Explain the limitations of accounting information.
Lessons
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Efficiency ratios and working capital management
50 min
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Interpreting ratios, linking them and their limits
55 min
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Liquidity ratios and the ability to pay
50 min
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Profitability ratios and what they show
55 min
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Sample question
A sample question on this topic. Answer it, check it, then read the worked answer.
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