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Business Studies IGCSEPDF 156
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5.3. Income statements continued
5.3.2 Income statements:
5.4 Statement of financial position
5.4.1 The main elements of a statement of financial
position:
5.4.2 Interpret a simple statement of financial
position and make deductions from it,
e.g. how a business is financing its activities
and what assets it owns, sale of inventories
to raise finance (constructing statements of
financial position will not be assessed)
5.5 Analysis of accounts
5.5.1, Profitability:
5.5.2 Liquidity:
5.5.3 How to interpret the financial performance
of a business by calculating and analysing
profitability ratios and liquidity ratios:
5.5.4 Why and how accounts are used:
Main features of an income statement,
€.g. revenue, cost of sales, gross profit, profit
and retained profit
Use simple income statements in decision-
making based on profit calculations
(constructing income statements will not be
assessed)
The main classifications of assets and liabilities,
using examples
The concept and importance of profitability
The concept and importance of liquidity
Gross profit margin
Profit margin
Return on Capital Employed
Current ratio
Acid test ratio
Needs of different users of accounts and ratio
analysis
How users of accounts and ratio results might
use information to help make decisions, e.g.
whether to lend to or invest in the business