ACCA FR 2026: Why 'The Ratio Went Up' Scores Zero in the Analysis Question

In the FR analysis question, writing "gross profit margin rose to 16.1%, above the 13.0% sector average" earns you nothing. The examiner has said it outright: no marks for quoting a ratio, explaining what it means, or noting that it went up or down. The marks live in the scenario — and most candidates never touch them.

What the examiner actually said

The March/June 2025 FR examiner report dissects Longannet Co, a supermarket interpretation question worth 12 marks. The verdict was blunt: "most candidates failed to score high marks," and the reason was "poor exam technique" — either not addressing the requirement, or not using the information in the scenario.

Then the rule, in the examiner's own words: "No marks will be awarded for stating the constituent parts of a ratio calculation or what the ratio means... nor will marks be awarded for stating that a ratio has increased or decreased." Ratio-spotting is a zero. Every year candidates fill a page with it anyway.

Here's the standard the examiner rewards instead. Longannet is described as the largest supermarket chain in its country. That single fact should trigger a chain of reasoning: largest chain means economies of scale and stronger buyer power, which explains both its higher gross margin of 16.1% vs 13.0% for the sector and its longer payables period of 79 days vs 65 days. One scenario fact, two ratios explained. That is what a good answer looks like.

The traps that cost real marks

Many candidates blamed the higher gross margin on the newly opened budget stores. Wrong direction — budget supermarkets run high volume at low margin, so they would drag the margin down, not push it up. Using the scenario incorrectly scores nothing; you have to reason about which way each fact pushes the number.

Another recurring error: candidates cited "rentals" hurting operating margin. Longannet owns its properties. And even where a lease exists, IFRS 16 puts depreciation on the right-of-use asset plus a finance cost on the liability into the accounts — not rent. The examiner called this "a fundamental misunderstanding of IFRS 16."

Wrong answer vs right answer

Scores zero: "Longannet's gross profit margin is 16.1%, which is higher than the sector average of 13.0%. Gross profit margin measures profitability. This shows the company is performing well."

Scores the marks: "As the largest chain in the country, Longannet has the scale and buyer power to negotiate lower purchase costs, supporting its 16.1% gross margin against the sector's 13.0%. The same buyer power lets it hold suppliers to 79 days versus the sector's 65. Its new home furnishings range — slower-moving than food — helps explain higher inventory days, but as furnishings are non-perishable this is not a concern."

Same ratios. The difference is that the second answer reads the business.

What to do in the exam

1. Mine the scenario before you write. Pull three or four hard facts — market position, owned vs leased assets, a new product line, a financing change — and pin each one to a specific ratio difference. If a sentence doesn't reference a scenario fact, it probably scores nothing.

2. Develop every point — say why. "Inventory days are higher" is an observation. "Inventory days are higher because home furnishings turn slower than food, though this is low risk as they don't perish" is a mark. Push each point one step further.

3. Write a conclusion under its own heading. There is a mark in every analysis question for a short, scenario-specific conclusion. For Longannet: profitable and liquid, but the budget stores and home furnishings line add future risk. Many candidates skip it and hand back a free mark.

And on requirement (a) — the ratio calculations feeding your analysis — the report flagged the usual leaks: using revenue instead of cost of sales for inventory and payables days, applying the wrong profit figure in operating margin and ROCE, and uncertainty over what sits in capital employed. Show full workings; the own-figure rule only rescues you if your workings are visible.

Bottom line

Interpretation is, sitting after sitting, one of the lowest-scoring areas of FR Section C — and it is almost pure technique, not knowledge. The examiner isn't testing whether you can calculate a ratio. They're testing whether you can read a business. Calculate less, explain more.