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A Level · Accountancy · Chapter 21
Ch 21 Analysis and Interpretation of Financial Statements: complete notes
Neat, exam-ready notebook-style notes for Ch 21 Analysis and Interpretation of Financial Statements, following the Cambridge A Level 9706 syllabus, AS and A Level. This chapter is part of the complete A Level Accounting 9706 Complete Notes: All 25 Chapters, AS and A Level (Cambridge 2026–2028).
Free preview: Ch 21 Analysis and Interpretation of Financial Statements notes
A quick look at the chapter from our A Level Accountancy notes. The full chapter notes have the detailed explanations, diagrams and practice questions with answers.
Topics in this chapter
- 3.5 Analysis and communication of accounting information
- Working capital management
- Solvency: interest cover and gearing
- Investment ratios
- Interrelationships between ratios
- Analysing, evaluating and recommending
“I can” checklist: what you must be able to do
- calculate the working capital cycle, following rounding instructions
- calculate net working assets to revenue
- calculate interest cover and gearing and explain financial risk
- calculate EPS, P/E, DPS, dividend yield and dividend cover
- find missing figures by rearranging ratio formulae
- explain how ratios are linked to each other
- compare years, businesses and industry averages
- state the limitations of ratio analysis
- advise a stakeholder with balanced, figure-based points
- recommend practical measures to improve performance
What is inside the full chapter notes
- All the appendix ratios (AS and A Level) applied to one company over two years; interrelationships; missing figures; investor comparisons; 8 worked examples
- Exam skills for Paper 3; common mistakes from the examiner report
- 20 exam-style multiple-choice questions, explained
- Two Paper 3 style questions (25 marks each) with full mark schemes; quick reference and "I can" checklist
What you get in the pack
- All 25 chapters of the Cambridge International AS & A Level Accounting 9706 syllabus (exams 2026–2028): business entities, double entry, non-current assets, trial balance and errors, bank reconciliation, control accounts, adjustments, sole trader, partnership and limited company accounts, ratios, costing, absorption and marginal costing, partnership changes, clubs, manufacturing accounts, statements of cash flows, IAS and auditing, mergers, activity based costing, standard costing, budgeting and investment appraisal
- Every syllabus statement covered in order, each marked AS or A Level, with clear notes, tables and diagrams drawn for these notes
- 8 worked examples in every chapter: calculations and model answers that show how to earn the marks
- Exam skills for every paper (layouts, workings, own-figure marks, advise and evaluate answers) and common mistakes taken from Cambridge examiner reports
- 20 multiple-choice questions per chapter with answers and explanations
- Original exam-style structured questions in the style of Papers 1–4 with full mark schemes and complete answer layouts (no past-paper reprints)
- Quick-reference sheet and an "I can" checklist at the end of every chapter
- Colour PDF and a black and white copy of every chapter for printing
- Independent notes; not endorsed by or affiliated with Cambridge University Press & Assessment
All chapters in this pack
- Ch 1 Types of Business Entity
- Ch 2 The Accounting System and Accounting Concepts
- Ch 3 Accounting for Non-current Assets
- Ch 4 Trial Balance, Errors and Suspense Accounts
- Ch 5 Bank Reconciliation Statements
- Ch 6 Control Accounts
- Ch 7 Adjustments to Financial Statements
- Ch 8 Financial Statements of Sole Traders
- Ch 9 Partnership Accounts
- Ch 10 Limited Company Accounts
- Ch 11 Analysis and Communication of Accounting Information
- Ch 12 Costs and Cost Behaviour: Materials and Labour
- Ch 13 Costing Applications and Absorption Costing
- Ch 14 Marginal Costing and Cost-Volume-Profit Analysis
- Ch 15 Partnerships: Goodwill, Changes and Dissolution
- Ch 16 Clubs and Societies
- Ch 17 Manufacturing Accounts
- Ch 18 Limited Companies: Share Issues, Reserves and Statements of Cash Flows
- Ch 19 International Accounting Standards, Ethics and Auditing
- Ch 20 Business Acquisition, Merger and Computerised Accounting Systems
- Ch 21 Analysis and Interpretation of Financial Statements
- Ch 22 Activity Based Costing
- Ch 23 Standard Costing and Variance Analysis
- Ch 24 Budgeting and Budgetary Control
- Ch 25 Investment Appraisal