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Financial Statement Analysis
Quick questions on Interpretation and limitations of ratios explained: H2 Principles of Accounting
3short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is q1?Show answer
State three bases against which a ratio can be compared. [3 marks]
What is q2?Show answer
A company's ROCE rises while its gearing also rises sharply. Explain why an investor should be cautious. [2 marks]
What is q3?Show answer
Explain why differing accounting policies limit inter-firm ratio comparison. [3 marks]
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