![Page 1: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/1.jpg)
HIGHER LEVEL
ASSESSING A BUSINESS
![Page 2: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/2.jpg)
Overview
Who is interested in the accounts of a business?
Profitability ratiosLiquidity ratiosActivity ratiosDividend policyHow to structure your answer
![Page 3: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/3.jpg)
Interested Parties
1. Management – performance of a company from one year to the next
2. Revenue Commissioners – calculating tax based on profits made
3. Bank – repayments of loans and overdrafts4. Creditors – can you make repayments for
goods bought on credit5. Employees – can their wages be paid, job
security6. Investors – is it a good company to invest in
![Page 4: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/4.jpg)
Profitability
![Page 5: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/5.jpg)
Liquidity
![Page 6: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/6.jpg)
Activity
![Page 7: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/7.jpg)
![Page 8: HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend](https://reader030.vdocuments.net/reader030/viewer/2022033102/56649f0d5503460f94c21328/html5/thumbnails/8.jpg)
Layout of solutions
1. State the formula
2. Show the workings for the two years
3. Show the correct unit with each answer e.g. ratio, %, times
4. In your evaluation, outline the difference between the two years performance.
5. For Liquidity ratios, outline the IDEALS1. Working capital ratio 2:12. Acid-test ratio 1:1