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Cambridge IGCSE Business Studies practice

Paper 1 structured question: Analysis of accounts

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Analysis of accounts

Exam-style question

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Paper 1Short Answer and Data Response1 marks

A local bakery has reported a net profit margin of 15%.

Description

Bakery Profitability

The bakery's total revenue for the year was $200,000, and its total expenses were $170,000.

  1. a

    State the net profit of the bakery.

    Aim for approximately 1 distinct marking point.

    [1]

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Paper 1 structured question: Analysis of accounts

Paper 1Short Answer and Data Response4 marks

Data Table

Profitability Ratios

RatioValue
Gross Profit Margin40%
Net Profit Margin15%
Return on Investment10%
  1. a

    Explain the significance of a high gross profit margin for the company.

    Aim for approximately 2 distinct marking points.

    [2]
  2. b

    Justify the importance of monitoring net profit margin regularly.

    Aim for approximately 2 distinct marking points.

    [2]