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CAIE IGCSE Business Studies 5.5 Analysis of Accounts Questions

Use this accounts-analysis page to interpret ratios, compare financial performance and explain how users rely on accounts.

Syllabus
2027–2029
Course
Business 0264

Exam points

  • Interpret profitability and liquidity changes using figures from the case appendix.
  • Explain how suppliers, shareholders, banks or managers use financial information.
  • Justify decisions such as takeover choice or shop closure using appropriate ratios.

Covered syllabus points

5.5.1—Profitability5.5.2—Liquidity5.5.3—Users of accounts

Question 1

[Maximum number: 10]

GTB is a business which operates in the tertiary sector．It owns 5 cafés selling food and drinks． The business uses social media as its method of promotion．The Finance Manager，Moeen，is analysing GTB＇s financial statements．An extract is shown in Table 2．1．He is considering ways to improve GTB＇s profit margin．Moeen knows there are other users that are interested in the accounts of a business．

Table 2.1

Table 2.1

Question (a)

(a)

Outline two ways GTB could improve its profit margin．

Way 1：

Way 2：

[ 4 ]

Question (b)

(b)

Do you think banks are the main external users of the accounts of a business? Justify your answer.

[ 6 ]

Question 2

[Maximum number: 4]

AHG is an established business as it has been operating for a long time. It sells garden products including plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30 other employees. All AHG's managers use delegation. The Finance Manager is analysing AHG's statement of financial position as she is interested in its liquidity. An extract is shown in Table 1.1.

Table 1.1

Table 1.1

Outline two possible reasons why liquidity is important to AHG.

Reason 1:
Reason 2:

Question 3

[Maximum number: 6]

Elton is a sole trader. He sells specialist clothing and equipment for sports, including baseball and hockey. It is a niche market. Elton started his business 5 years ago and it has remained small. A wide range of inventory is important. Elton has been looking at the financial performance of his business. The profit margin for 2018 was 35%. An extract of the accounts is shown in Table 3.1.

Table 3.1

Table 3.1

Do you think Elton should be pleased with the financial performance of his business? Justify your answer using appropriate ratios.

Question 4

[Maximum number: 4]

GTB is a business which operates in the tertiary sector．It owns 5 cafés selling food and drinks． The business uses social media as its method of promotion．The Finance Manager，Moeen，is analysing GTB＇s financial statements．An extract is shown in Table 2．1．He is considering ways to improve GTB＇s profit margin．Moeen knows there are other users that are interested in the accounts of a business．

Table 2.1

Table 2.1

Outline two ways GTB could improve its profit margin．

Way 1：

Way 2：

Question 5

[Maximum number: 6]

GTB is a business which operates in the tertiary sector．It owns 5 cafés selling food and drinks． The business uses social media as its method of promotion．The Finance Manager，Moeen，is analysing GTB＇s financial statements．An extract is shown in Table 2．1．He is considering ways to improve GTB＇s profit margin．Moeen knows there are other users that are interested in the accounts of a business．

Table 2.1

Table 2.1

Do you think banks are the main external users of the accounts of a business? Justify your answer.

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