Cambridge IGCSE Accounting practice

Paper 2 structured question: Interpretation of accounting ratios

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Paper

Marks

Topic

Interpretation of accounting ratios

Exam-style question

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Paper 2Structured Written Paper3 marks

A retail company is analyzing its financial performance over the last three years.

Description

The company has experienced fluctuations in sales and expenses, impacting its profitability.

a
Evaluate Discuss the importance of distinguishing between gross margin and profit margin in assessing the company's efficiency.
Your answer
Aim for approximately 3 distinct marking points.
[3]

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Paper 2Structured Written Paper3 marks

Data Table

The table below shows the sales, cost of goods sold, and expenses for the company.

Year	Sales	Cost of Goods Sold	Expenses
2022	$200,000	$120,000	$50,000
2023	$250,000	$150,000	$70,000

a
Analyse Calculate the gross margin and profit margin for both years and discuss the changes observed.
Your answer
Aim for approximately 3 distinct marking points.
[3]