What this practice covers
These questions are drawn from past CIE 0452 Accounting papers and filtered to interpretation of accounting ratios. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on interpretation of accounting ratios, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Calculating the ratio and stopping, with no comment.
- Restating the ratio in words as though that were the explanation.
- Giving a cause that does not fit the direction of the change.
- Saying a high current ratio is always good.
- Using profit figures to explain a liquidity ratio, or the reverse.
- Comparing a small sole trader with a large company and drawing a conclusion.
- Suggesting improvements with no mention of their cost or risk.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Interpretation of accounting ratios revision notes.