Accounting 0452 · IGCSE · Interpretation of accounting ratios

Interpretation of accounting ratios — practice question

Ajay runs a retail business. He has supplied the information below.
(a)[11]

Fill in the table below.

(b(i))[1]

Suggest one reason why Ajay’s gross margin has risen.

(b(ii))[1]

State one reason why Ajay’s customers may want to see his financial statements.

(c)[5]

Advise Ajay whether or not he ought to reduce his selling price. Support your answer with the advantages and disadvantages of lowering the selling price.

(d)[2]

State two reasons why Ajay ought to be worried about his declining profit margin.

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