OxfordAQA A-Level Accounting: Analysis and evaluation of financial information (9615) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 3.1.8, Analysis and evaluation of financial information, of the OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards. It is International AS content, listed in the specification among the sections assessed in Paper 1 and in Paper 2. Every name and number is made up; amounts are in dollars. Use the ratio formulae from the OxfordAQA guide Formulae for accounting ratios.

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Questions

1. A trader’s revenue is 320,000 and gross profit is 76,800. Calculate the markup and the gross profit margin. [3]

2. State which of the four appraisal headings (profitability, liquidity, efficiency, capital structure) each ratio belongs to.

(a) Trade payable days [1] (b) Capital gearing [1]

3. Opening inventory is 18,400, closing inventory is 21,600 and cost of sales is 230,000. Calculate the rate of inventory turnover, both as a number of times and as a number of days. [3]

4. Fawnridge Coffee Roasters had revenue of 380,000, of which 88,000 was cash sales. Trade receivables at the year end were 28,800. Credit purchases were 255,500 and trade payables were 29,400.

(a) Calculate trade receivable days and trade payable days. [4] (b) Comment on what the two results show about the business’s cash flow. [2]

5. Linnet Bakehouse has inventory 31,500, trade receivables 22,400 and bank 6,100. Trade payables are 21,000 and other payables 3,000. Calculate the current ratio and the liquid capital ratio. [4]

6. Sorrelby Photo Studio, owned by a sole trader, reported profit for the year of 37,800. Capital was 196,000 at the start of the year and 214,000 at the end. A long-term loan of 56,000 was outstanding all year.

(a) Calculate return on capital employed using closing capital. [2] (b) Calculate capital gearing using closing capital. [2] (c) Explain why an answer of 15.00% for part (a) could also be accepted. [1]

7. Ardwyn Cables Ltd reports profit from operations of 117,000 and profit for the year after tax of 72,000. Its issued share capital is 500,000, share premium 60,000, retained earnings 190,000 and non-current liabilities 150,000. Calculate return on capital employed and capital gearing. [4]

8. A business has current assets of 75,000, including inventory of 30,000, and current liabilities of 30,000. Starting from these figures each time, show how each event changes profit, the current ratio and the liquid capital ratio.

(a) The owner pays in 10,000 of extra capital. [2] (b) Inventory costing 5,000 is bought for cash. [2] (c) Wages of 4,000 owed at the year end are accrued. [2]

9. Nyberg Mobile Mechanics made a profit for the year of 44,000. During the year depreciation was 9,000, trade receivables fell by 2,500, inventory rose by 6,500 and trade payables rose by 1,800. The owner took drawings of 31,000, paid in extra capital of 8,000 and bought diagnostic equipment for 25,000. The opening bank balance was 4,200.

Calculate the change in the bank balance and the closing bank balance, and explain why it differs from profit. [5]

10. The owner of Linnet Bakehouse wants to compare her ratios with those of a large national supermarket chain’s bakery division. Explain one financial and one non-financial limitation of this comparison. [4]

11. Tolland Lighting is a sole trader supplying lamps to hotels and shops. All sales are on credit. In 2026 the owner cut prices to win a contract with a hotel group and gave it 60-day credit terms. A competitor opened nearby, and an experienced salesperson left.

2026 extract
Revenue	360,000
Gross profit	131,400
Profit for the year	30,600
Current assets (including inventory 39,000)	66,000
Current liabilities	44,000
Trade receivables	49,320

2025 ratios: gross profit margin 40.00%; profit in relation to revenue 11.00%; current ratio 1.80 : 1; trade receivable days 38.9. 2025 revenue was 300,000.

(a) Calculate the same four ratios for 2026. [4] (b) Evaluate Tolland Lighting’s performance in 2026 compared with 2025. Consider profitability, liquidity and efficiency, and reach a conclusion. [8]

Answers

1. Margin = 76,800 / 320,000 × 100 [1] = 24.00% [1]. Cost of sales 243,200, so markup = 76,800 / 243,200 × 100 = 31.58% [1] Examiner insight: Show cost of sales (revenue less gross profit) before the markup; a bare 31.58% with no working gives an examiner nothing to credit if the figure is slightly wrong.

2. (a) Efficiency [1] (b) Capital structure [1] Examiner insight: Payable days are often wrongly filed under liquidity; they measure how fast the business turns over its credit, so they sit with efficiency.

3. Average inventory = (18,400 + 21,600) / 2 = 20,000 [1]. Turnover = 230,000 / 20,000 = 11.5 times [1]. Days = 20,000 / 230,000 × 365 = 31.7 days [1] Examiner insight: Using closing inventory alone gives 10.6 times instead of 11.5; when opening and closing figures are both given, average them.

4. (a) Credit sales = 380,000 − 88,000 = 292,000 [1]. Receivable days = 28,800 / 292,000 × 365 = 36.0 days [1]. Payable days = 29,400 / 255,500 × 365 [1] = 42.0 days [1] (b) Customers pay in about 36 days but suppliers are paid in about 42 days [1], so cash comes in roughly six days before it goes out, which helps the bank balance [1] Examiner insight: For both marks you need the comparison and its consequence; stating the two figures again earns nothing new.

5. Current assets = 31,500 + 22,400 + 6,100 = 60,000; current liabilities = 24,000 [1]. Current ratio = 60,000 / 24,000 = 2.50 : 1 [1]. Liquid = (60,000 − 31,500) / 24,000 [1] = 1.19 : 1 [1] Examiner insight: Write “: 1” after each answer; a ratio given as 250% or 2.5 alone is presented in the wrong form.

6. (a) 37,800 / (214,000 + 56,000) × 100 [1] = 14.00% [1] (b) 56,000 / 270,000 × 100 [1] = 20.74% [1] (c) The OxfordAQA formula allows the opening capital figure: 37,800 / (196,000 + 56,000) × 100 = 15.00% [1] Examiner insight: Do not add loan interest back to a sole trader’s profit; the OxfordAQA formula uses profit for the year as reported.

7. Equity = 500,000 + 60,000 + 190,000 = 750,000 [1]. ROCE = 117,000 / (750,000 + 150,000) × 100 = 13.00% [1]. Gearing = 150,000 / 900,000 × 100 [1] = 16.67% [1] Examiner insight: The 72,000 is a distractor; company ROCE uses profit from operations, and share premium and retained earnings are both reserves.

8. Starting ratios: current 2.50 : 1, liquid 1.50 : 1. (a) No effect on profit; current = 85,000 / 30,000 = 2.83 : 1 [1]; liquid = 55,000 / 30,000 = 1.83 : 1 [1] (b) No effect on profit; current unchanged at 2.50 : 1 [1]; liquid = 40,000 / 30,000 = 1.33 : 1 [1] (c) Profit falls by 4,000 [1]; current liabilities become 34,000, so current = 2.21 : 1 and liquid = 45,000 / 34,000 = 1.32 : 1 [1] Examiner insight: Work each transaction from the original figures, not from the result of the previous part.

9.

Profit for the year              44,000
Add depreciation                 +9,000
Decrease in trade receivables    +2,500
Increase in inventory            −6,500
Increase in trade payables       +1,800
Drawings                        −31,000
Capital introduced               +8,000
Equipment bought                −25,000
Change in bank                   +2,800

Depreciation added back [1]; working capital changes with correct signs [1]; drawings, capital and equipment treated correctly [1]. Bank rises by 2,800, closing balance 4,200 + 2,800 = 7,000 [1]. Profit is measured on the accruals basis; drawings, equipment and extra inventory used cash without being expenses, and capital introduced is not income [1] Examiner insight: Test each working capital sign by asking whether cash came in or went out: falling receivables and rising payables both help the bank.

10. Financial: the chain may use different accounting policies, such as depreciation methods [1], so ratios like ROCE are not measured on the same basis [1]. Non-financial: the chain has a well-known brand and buying power that the statements do not show [1], so Linnet’s lower margin may reflect scale rather than poor management [1] Examiner insight: Each limitation needs a point plus its effect on this comparison; two points with no development tend to earn half the marks.

11. (a) Gross profit margin = 131,400 / 360,000 × 100 = 36.50% [1]. Profit in relation to revenue = 30,600 / 360,000 × 100 = 8.50% [1]. Current ratio = 66,000 / 44,000 = 1.50 : 1 [1]. Receivable days = 49,320 / 360,000 × 365 = 50.0 days [1] (b)

• Revenue rose 20% from 300,000 to 360,000, but gross profit margin fell from 40.00% to 36.50%, consistent with the price cuts for the hotel contract [1]
• Profit for the year fell from 33,000 to 30,600, so the extra sales did not add profit [1]
• Expenses in relation to revenue eased from 29.0% to 28.0%; the damage lies in pricing, not running costs [1]
• The current ratio fell from 1.80 : 1 to 1.50 : 1; it is still above 1 : 1 [1]
• But the liquid capital ratio is (66,000 − 39,000) / 44,000 = 0.61 : 1, so current liabilities cannot be met without selling inventory [1]
• Receivable days rose by 11.1 days, reflecting the 60-day terms; more cash is locked in receivables and the chance of irrecoverable debts grows [1]
• Non-financial: a new competitor and the loss of an experienced salesperson may hold back future sales, though the hotel group could bring repeat orders [1]
• Conclusion: performance worsened; the hotel contract added volume but cost margin and cash. The owner should shorten credit terms or chase debts, though one year’s comparison is a limited basis for judgement [1]

Examiner insight: Strong answers quote figures as evidence, attach a cause to each change and finish with a supported judgement; a list of ratios that “went up” or “went down” earns little.

Where marks are usually lost

• Using total revenue in receivable days when cash sales are given separately.
• Calculating markup on revenue or margin on cost of sales.
• Taking profit after tax, not profit from operations, for company ROCE.
• Adding interest back for sole trader ROCE, which this specification’s formula does not do.
• Giving current and liquid ratios as percentages or without “: 1”.
• Carrying the result of one transaction into the next in “treated separately” questions.
• Reversing the sign of a working capital change in a cash-versus-profit working.
• Finishing an evaluation with no overall verdict.

Next steps

• Revision notes
• Study guide
• Preparation of financial statements of sole traders
• Exam preparation guide
• Course hub
• Printable checklist
• All free 10-minute diagnostics
• Book a free trial class

Official syllabus

OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards, published by OxfordAQA – section 3.1.8, Analysis and evaluation of financial information. Formulae from the OxfordAQA guide Formulae for accounting ratios.