Analysis and Communication of Accounting Information

Worked examples (10)

• 1Current ratio (3 marks)
• 2Acid-test ratio (4 marks)
• 3Inventory turnover (4 marks)
• 4Receivables and payables days (5 marks)
• 5Inventory days (4 marks)
• 6Working capital cycle (4 marks)
• 7Interpret a falling current ratio (5 marks)
• 8Shortening the cash cycle (4 marks)
• 9Can liquidity be too high? (4 marks)
• 10Spotting overtrading risk (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1Gearing ratio (4 marks)
• 2Debt/equity version (3 marks)
• 3Interest cover (4 marks)
• 4High or low geared? (3 marks)
• 5Interpret low interest cover (4 marks)
• 6Gearing boosting returns (5 marks)
• 7Risk of high gearing (4 marks)
• 8Debt vs equity finance (5 marks)
• 9Gearing and cover together (5 marks)
• 10Reducing gearing (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1Earnings per share (4 marks)
• 2Dividend per share (3 marks)
• 3Dividend cover (3 marks)
• 4Dividend yield (4 marks)
• 5Price/earnings ratio (4 marks)
• 6Interpret dividend cover (4 marks)
• 7Interpret the P/E ratio (4 marks)
• 8Advise an income investor (5 marks)
• 9EPS over time (4 marks)
• 10A high yield warning (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1Match the ratio to the group (4 marks)
• 2Why comparison matters (4 marks)
• 3Which ratios for which user? (4 marks)
• 4Profitable but illiquid (5 marks)
• 5Two limitations (4 marks)
• 6Accounting-policy differences (4 marks)
• 7A snapshot can mislead (4 marks)
• 8Non-financial factors (4 marks)
• 9Structure an analysis (5 marks)
• 10What, not why (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style