Syllabus C2. Accounting Ratios - Profitability 2 / 9

a) Define and compute relevant financial ratios.[2] 

b) Explain what aspects of performance specific ratios are intended to assess.[2] 

c) Analyse and interpret ratios to give an assessment of an entity’s/group’s performance and financial position in comparison with:[2] 

i) previous period’s financial statements ii) another similar entity/group for the same reporting period iii) industry average ratios.

d) Interpret financial statements (including statements of cash flows) together with other financial and non-financial information to assess the performance and financial position of an entity and to give advice from the perspectives of different stakeholders.[2] 

e) Discuss how the use of current values affects the interpretation of financial statements and how this would compare to using historical cost.[2] 

f) Indicate other information, including nonfinancial information, that may be of relevance to the assessment of an entity’s performance and financial position.[1]
Accounting Ratios - Profitability