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Ch 20 Accounting Ratios: Calculation and Interpretation: complete notes
Neat, exam-ready notebook-style notes for Ch 20 Accounting Ratios: Calculation and Interpretation, following the Cambridge IGCSE 0452 syllabus. This chapter is part of the complete IGCSE Accounting 0452 Complete Notes: All 22 Chapters with Full Layouts and Mark Schemes (Cambridge 2027–2029).
Free preview: Ch 20 Accounting Ratios: Calculation and Interpretation notes
A quick look at the chapter from our IGCSE Accountancy notes. The full chapter notes have the detailed explanations, diagrams and practice questions with answers.
Topics in this chapter
- 6.1 Calculation and understanding of accounting ratios
- The case study: Chen Electricals
- What the ratios mean and how to improve them
- 6.2 Interpretation of accounting ratios
- What affects gross profit and profit for the year
- Why cash and profit are different
“I can” checklist: what you must be able to do
- state the ten formulas exactly
- calculate profitability ratios to 2 d.p.
- calculate ROCE with the right figures
- calculate current and acid test ratios as x : 1
- calculate inventory, receivables and payables turnover
- prepare a comparison statement for two years
- interpret ratios: better/worse, reason, effect
- suggest improvements to profit, liquidity, working capital
- explain what affects gross profit and profit
- explain why cash and profit differ
What is inside the full chapter notes
- The ten syllabus formulas, how to present each answer, interpretation and improvement tables, a full two-year case study (Chen Electricals), 8 worked examples
- Exam skills for Paper 2; common mistakes from the examiner report
- 20 Paper 1 style multiple-choice questions, explained
- Two Paper 2 style questions (20 marks each) with full mark schemes
- Quick-reference table, "I can" checklist
What you get in the pack
- All 22 chapters of the Cambridge IGCSE Accounting 0452 syllabus (exams 2027–2029): the accounting equation, double entry, business documents, books of prime entry, the trial balance, correction of errors, bank reconciliation, control accounts, depreciation, accruals and prepayments, irrecoverable debts, inventory, financial statements of sole traders, partnerships, limited companies, manufacturers and clubs, incomplete records, ratios and accounting concepts
- Every syllabus statement covered in order, with clear notes and complete accounting layouts drawn for these notes
- Worked examples with full layouts, exam skills and key definitions in every chapter
- Common mistakes taken from Cambridge examiner reports, so you know where marks are lost
- 20 Paper 1 style MCQs per chapter with answers and explanations
- Original exam-style questions in the style of Paper 1 (multiple choice) and Paper 2 (structured written paper), with full mark schemes (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 The Purpose of Accounting and the Accounting Equation
- Ch 2 The Double Entry System of Book-keeping
- Ch 3 Business Documents
- Ch 4 Books of Prime Entry
- Ch 5 The Trial Balance
- Ch 6 Correction of Errors
- Ch 7 Bank Reconciliation
- Ch 8 Control Accounts
- Ch 9 Capital and Revenue Expenditure and Receipts
- Ch 10 Depreciation and Disposal of Non-current Assets
- Ch 11 Other Payables and Other Receivables
- Ch 12 Irrecoverable Debts and Allowance for Irrecoverable Debts
- Ch 13 Valuation of Inventory
- Ch 14 Financial Statements of Sole Traders
- Ch 15 Partnerships
- Ch 16 Limited Companies
- Ch 17 Manufacturing Accounts
- Ch 18 Clubs and Societies
- Ch 19 Incomplete Records
- Ch 20 Accounting Ratios: Calculation and Interpretation
- Ch 21 Inter-business Comparison, Interested Parties and Limitations
- Ch 22 Accounting Concepts, Ethics, Technology and Sustainability