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ZIMSEC O-Level Principles of Accounting

14Accounting Ratios

Accounting Ratios in ZIMSEC O-Level Principles of Accounting: what the syllabus expects you to know, the learning objectives and how to practise.
Topic62 practice questions4 lessons
Practise this topicAll Principles of Accounting topics

Overview

Form 4: profitability ratios (mark-up, margin, net profit percentage) and liquidity ratios (current ratio, quick ratio, rate of inventory turnover).

Learning objectives

What the syllabus expects you to be able to do.

  1. 14.1Form 4: recall the profitability and liquidity ratio formulae and compute the ratios.
  2. 14.2Form 4: apply the ratios to arrive at missing figures.

Lessons

  • Efficiency ratios: inventory turnover and collection and payment periods

    30 min

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  • Liquidity ratios: the current ratio and the acid test

    30 min

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  • Mark-up and margin: converting and finding missing figures

    30 min

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  • Profitability ratios: margin, mark-up, profit margin and ROCE

    35 min

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Sample question

A sample question on this topic. Answer it, check it, then read the worked answer.

Accounting Ratios: sample question

1 mark

Cost of sales was US$54,600. Inventory was US$7,200 at the start of the year and US$8,400 at the end. What was the rate of inventory turnover?

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