Analysing the financial performance of a business

Why are financial statements important?

They help assess business performance and make business decisions.

What are the main components of financial statements?

The income statement and the statement of financial position.

What should students understand about assets and liabilities?

The difference between assets and liabilities.

What is the statement of financial position?

A snapshot in time.

How can the performance of a business be judged?

By interpreting information contained in income statements.

What should current performance be compared with?

Previous years and competitors.

Whose perspectives should be considered when assessing business performance?

A range of stakeholders.

What should students be able to calculate to assess financial performance?

Gross profit margin and net profit margin.

Why is gross profit margin calculated?

To help assess financial performance.

Why is net profit margin calculated?

To help assess financial performance.

Will formulae be given in the exam?

No, students will not be given formulae in an exam.