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Quick questions on Ratio analysis explained: H2 Management of Business
5short 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 are interpreting ratios?Show answer
A single ratio is almost meaningless. It becomes informative only relative to a benchmark:
What is evaluating ratio analysis?Show answer
Ratios are a powerful, quick way to assess performance and compare firms, but they have limits:
What is q1?Show answer
A firm has gross profit of \150{,}000 on revenue of \500{,}000. Calculate its gross profit margin. [2 marks]
What is q2?Show answer
Explain why a firm with a current ratio of 0.8 might be in difficulty. [4 marks]
What is q3?Show answer
Analyse why ratio analysis alone is not enough to judge a company's performance. [6 marks]
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