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

5.3.1 What profit is and why it is important: • How a profit is made • Importance of profit to private sector businesses, e.g. reward for risk-taking/enterprise, source of finance • Difference between profit and cash 5.3.2 Income statements: • Main features of an income statement, e.g. revenue, cost of sales, gross profit, profit and retained profit • Use simple income statements in decision making based on profit calculations (constructing income statements will not be assessed) *Questions and suggested answers"

The key terms associated with market failure: public good, merit good, demerit good, social benefits, external benefits, private benefits, social costs, external costs, private costs. With respect to public goods, merit and demerit goods, external costs and external benefits, abuse of monopoly power and factor immobility. Examples of market failure with respect to these areas only. The implications of misallocation of resources in respect of the over consumption of demerit goods and goods with external costs, and the under consumption of merit goods and goods with external benefits. Note: demand and supply diagrams relating to market failure are not required. Market failure review - PPT Supply and demand review - PPT Questions and suggested solutions doc

PPT covering: • Basis of business classification, using examples to illustrate the classification • Reasons for the changing importance of business classification, e.g. in developed and developing economies

Including engaging in collective bargaining on wages, working hours and working conditions; protecting employment and influencing government policy. Factors influencing the strength of trade unions. From the viewpoint of workers, firms and the government. *Unit 3 review Questions with suggested solutions

5.4.1 The main elements of a statement of financial position: • The main classifications of assets and liabilities, using examples 5.4.2 Interpret a simple statement of financial position and make deductions from it, e.g. how a business is financing its activities and what assets it owns, sale of inventories to raise finance (constructing statements of financial position will not be assessed) Questions and suggested answers*

Locally, nationally and internationally. Questions and suggested answers

Total cost (TC), average total cost (ATC), fixed cost (FC), variable cost (VC), average fixed cost (AFC), average variable cost (AVC). Calculation of TC, ATC, FC, VC, AFC and AVC. Definition, drawing and interpretation of diagrams that show how changes in output affect costs of production. Total revenue (TR) and average revenue (AR). Note: marginal revenue is not required. Calculation of TR and AR. The influence of sales on revenue. Survival, social welfare, profit maximisation and growth. *Unit 3 review Note: marginal cost (MC) not required. Questions with suggested solutions

PPT aligned to the CIE syllabus. Summative and formative assessments provided with suggested solutions. Topics covered included the PPC scarcity, opportunity costs, efficiency etc.

PPT aligned to the CIE syllabus. Summative and formative assessments provided with suggested solutions. Topics covered included scarcity, opportunity costs, factors of production etc.

PPT aligned to the CIE syllabus. Summative and formative assessments provided with suggested solutions. Topics covered included private goods, public goods, free-rider problem, exclusivity, rivalrous, merit goods, demerit goods, imperfect information etc