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5.5. Analysis of accounts

Syllabus
0264–2027–2028
Topic
5.5
Level
—

5.5.1—Profitability

  • concept of profitability
  • calculate and interpret the following profitability ratios:
  • gross profit margin
  • profit margin
  • return on capital employed (ROCE)

5.5.2—Liquidity

  • concept of liquidity
  • calculate and interpret the following liquidity ratios:
  • current ratio
  • acid test ratio

5.5.3—Users of accounts

  • users of accounts and ratio analysis: internal, e.g. owners (sole traders, partnerships, shareholders), managers, employees
  • users of accounts and ratio analysis: external, e.g. suppliers, government, lenders/banks
  • how users of accounts may use financial information to help make decisions, e.g. whether to lend to or invest in a business
  • limitations of using accounts and ratio analysis

Objective notes

3 learning objectives
ConceptIGCSE Business Studies