Ratio Analysis (Edexcel 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 advantage does ratio analysis provide compared to examining raw financial figures?
What key advantage does ratio analysis provide compared to examining raw financial figures?
Fair comparisons between different-sized firms
What does the gearing ratio compare?
What does the gearing ratio compare?
Non-current liabilities to capital employed
How is capital employed calculated?
How is capital employed calculated?
(Non-current + current assets) - current debts
A business with a gearing ratio of 55% would be classified as what?
A business with a gearing ratio of 55% would be classified as what?
Highly geared with greater financial risk
Why does high gearing create greater financial risk for a business?
Why does high gearing create greater financial risk for a business?
Interest is fixed; dividends are discretionary
ROCE is often called what type of ratio?
ROCE is often called what type of ratio?
The primary ratio
What does ROCE compare?
What does ROCE compare?
Operating profit to capital employed
Why does ROCE use operating profit rather than net profit?
Why does ROCE use operating profit rather than net profit?
Excludes tax and interest for pure operations
Why is a balance sheet described as a 'snapshot' in ratio analysis limitations?
Why is a balance sheet described as a 'snapshot' in ratio analysis limitations?
Shows position on one day, not typical all year
What is window dressing in financial reporting?
What is window dressing in financial reporting?
Legal manipulation to present info favourably