Question detail
SwiftServe serves small retailers while taking a loan; the case evidence includes capacity utilisation of ?8,321, sales of 101 units, and a 26% change in costs or demand. Which option best applies Interpret profitability ratios to support judgements about business performance?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Analysing the financial performance of a business
Question
- A. Use profitability ratios to judge average order value, local community impact, and the business objective in Profitability ratios.
- B. Give only a definition of Analysing the financial performance of a business without using the case evidence.
- C. Treat gross and net profit as identical and ignore the effect on local community.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use profitability ratios to judge average order value, local community impact, and the business objective in Profitability ratios.
Explanation
This is the best-supported choice because Use profitability ratios to judge average order value, local community impact, and the business objective in Profitability ratios. The case evidence gives ?9,821, 101 units, and 26%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse gross and net profit, miss the local community, or ignore the business objective.
Common mistake
Profitability ratios common mistake 1
Giving a vague answer instead of directly addressing: Interpret profitability ratios to support judgements about business performance..
Answer by clearly explaining how to interpret profitability ratios to support judgements about business performance..
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