Finance and accounting strategy

What the syllabus asks of you

• The use of accounting data to enable strategic decision-making: the use of financial statements in developing strategies
• The use of accounting data to enable strategic decision-making: the contents of an annual report and their usefulness to business and other stakeholders
• The use of accounting data and ratio analysis in strategic decision-making: assessment of business performance over time and against competitors
• The use of accounting data and ratio analysis in strategic decision-making: the impact of accounting data including ratio results on business strategy
• The use of accounting data and ratio analysis in strategic decision-making: the impact of debt or equity decisions on ratio results
• The use of accounting data and ratio analysis in strategic decision-making: the impact of changes in dividend strategy on ratio results
• The use of accounting data and ratio analysis in strategic decision-making: the impact of business growth on ratio results
• The use of accounting data and ratio analysis in strategic decision-making: the impact of other business strategies on ratio results
• The use of accounting data and ratio analysis in strategic decision-making: the limitations of using published accounts and ratio analyses Liquidity ratios Current assets Current liabilities Current ratio Answer presented as a ratio Current assets – inventory Current liabilities Acid test ratio Answer presented as a ratio Profitability ratios Gross profit Gross profit margin (%) Revenue × 100 Profit from operations Operating profit margin (%) × 100 Revenue Profit from operations × 100 Capital employed Return on capital employed (%) Capital employed = issued shares + reserves + non-current liabilities Financial efficiency ratios Trade receivables Trade receivables turnover (days) × 365 days Credit sales Trade payables Trade payables turnover (days) Credit purchases × 365 days Cost of sales Rate of inventory turnover (times) Average inventory Gearing ratio Non-current liabilities Gearing (%) × 100 Capital employed Investment ratios Market price per share Price/earnings ratio Earnings per share Dividend per share Dividend yield (%) Market price per share × 100 Profit for the year Dividend cover Annual dividend