5.5.1 Profitability:
• The concept and importance of profitability
5.5.2 Liquidity: • The concept and importance of liquidity
5.5.3 How to interpret the financial performance of a business by calculating and analysing profitability ratios and liquidity ratios:
• Gross profit margin
• Profit margin
• Return on Capital Employed
• Current ratio
• Acid test ratio
5.5.4 Why and how accounts are used: • Needs of different users of accounts and ratio analysis
• How users of accounts and ratio results might use information to help make decisions, e.g. whether to lend to or invest in the business
Questions and suggested answers
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