Value and Limitations of Ratios (AQA A-Level Business): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What key benefit do financial ratios provide when calculated across different time periods?
What key benefit do financial ratios provide when calculated across different time periods?
They identify trends in performance
Which factor must be considered when examining trends in ratios over time?
Which factor must be considered when examining trends in ratios over time?
Inflation rates affecting purchasing power
If a business has a low payables days ratio, what decision might management make?
If a business has a low payables days ratio, what decision might management make?
Negotiate longer credit period w/ suppliers
Why do potential investors frequently use financial ratios?
Why do potential investors frequently use financial ratios?
To assess performance and risk profile
What does the term 'high-geared business' mean?
What does the term 'high-geared business' mean?
A business with high levels of debt
Why are ratios particularly meaningful when comparing different-sized businesses?
Why are ratios particularly meaningful when comparing different-sized businesses?
Ratios standardise the data
What is a critical limitation of financial ratios?
What is a critical limitation of financial ratios?
They don't account for non-numerical factors
Which internal strength won't appear in ratio analysis?
Which internal strength won't appear in ratio analysis?
Staff quality and management expertise
What time period information do ratios contain?
What time period information do ratios contain?
Only past and present
In the XYZ Ltd example, what could ratio analysis not predict?
In the XYZ Ltd example, what could ratio analysis not predict?
New EU legislation banning the main product