FRF7

Syllabus C2. Calculation And Interpretation Of Accounting Ratios 2 / 4

a) Define and compute relevant financial ratios.

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

c) Analyse and interpret ratios to give an assessment of an entity’s/group’s performance and financial position in comparison with: 
i) previous period’s financial statements
ii) another similar entity/group for the same reporting period
iii) industry average ratios.

d) Interpret financial statements to give advice from the perspectives of different stakeholders.

e) Discuss how the interpretation of current value based financial statements would differ from those using historical cost based accounts.
Calculation And Interpretation Of Accounting Ratios