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10 marksFinancial Statements Analysis

CAPE Management of Business Unit 1 · 2011 · Paper 2 · Question 5(b)

Explain TWO limitations of using accounting ratios to assess the performance of a firm and suggest how EACH limitation may be overcome.

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  1. 5(a)(i)Calculate the gross profit margin for 2009 and 2010, and use your results to assess the performance of the company over the two-year period.[5 marks]
  2. 5(a)(ii)Calculate the net profit margin for 2009 and 2010, and use your results to assess the performance of the company over the two-year period.[5 marks]
  3. 5(a)(iii)Calculate the return on capital employed for 2009 and 2010, and use your results to assess the performance of the company over the two-year period.[5 marks]

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