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Financial Analysis and Ratios
Quick questions on Interpreting and comparing ratios: N(A)-Level Principles of Accounts
4short 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 ratios need a comparison?Show answer
A single ratio is just a number. To judge it, compare it against:
What is q1?Show answer
State two things a ratio can be compared against to make it meaningful. [2 marks]
What is q2?Show answer
A business's profit margin fell this year. State what a good answer must do beyond reporting the fall. [2 marks]
What is q3?Show answer
Explain one reason why comparing two businesses' ratios can be misleading. [2 marks]
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