OxfordAQA IGCSE Accounting: Accounting ratios and financial measures (9215) – 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.

This set is aligned to the OxfordAQA International GCSE Accounting (9215) specification, version 1.2, exams from May/June 2026 onwards. It covers section 3.5 on the calculation and interpretation of the nine listed financial measures and ratios, with questions on appraisal, cash and profit, and limitations. The answers use the standard forms of the formulae, so check them against the board’s own guide. All amounts are in dollars.

Revise first with the study guide and revision notes. Other links: course hub, checklist and the free diagnostics.

Questions

1. A trader had revenue of 80,000 and cost of sales of 60,000 for the year.

(a) Calculate the gross profit margin %. [2] (b) Calculate the markup %. [2]

2. A business started the year with inventory of 14,000, bought goods costing 97,000 and ended the year with inventory of 18,000.

(a) Calculate the cost of sales. [2] (b) Calculate the rate of inventory turnover. [2] (c) Explain one benefit to the business of a higher rate of inventory turnover. [2]

3. For the year, a business had revenue of 120,000, profit from operations of 22,000 and profit for the year of 18,000. At the year end, equity was 95,000 and non-current liabilities were 25,000.

(a) Calculate profit in relation to revenue %. [2] (b) Calculate capital employed. [1] (c) Calculate return on capital employed %. [2]

4. A business has inventory of 26,000, trade receivables of 18,000 and bank of 6,000. Its current liabilities are trade payables of 21,000 and accrued expenses of 3,000.

(a) Calculate the current ratio. [2] (b) Calculate the liquid capital ratio. [2] (c) The owner says: “Our current ratio is above 2 : 1, so we have no liquidity worries.” Comment on this view. [3]

5. A business made credit sales of 292,000 and credit purchases of 219,000 in the year. At the year end trade receivables were 40,000 and trade payables were 27,000.

(a) Calculate trade receivable days. [2] (b) Calculate trade payable days. [2] (c) Comment on the two results. [2]

6. A shop has a gross profit margin of 30% and cost of sales of 56,000.

(a) Calculate revenue. [2] (b) Calculate the markup %. [2]

7. A business has inventory of 14,000, trade receivables of 12,000 and bank of 10,000. Its only current liability is trade payables of 18,000. Treat each part separately.

(a) The business buys equipment for 9,000 and pays from the bank. Calculate the new current ratio. [2] (b) Instead, the business buys more inventory for 6,000 on credit. Calculate the new current ratio and the new liquid capital ratio. [3] (c) Instead, the business makes a sale of goods on credit. Explain the effect on profit and on the bank balance. [2]

8. Pellowick Bakery’s figures for two years are shown.

	Year 1	Year 2
Revenue	150,000	180,000
Cost of sales	90,000	117,000
Operating expenses	33,000	45,000

(a) Calculate the gross profit margin % and profit in relation to revenue % for each year. Treat revenue less cost of sales and operating expenses as profit from operations. [4] (b) Appraise the profitability of the bakery. [5]

9. Explain two limitations of ratio analysis when assessing business performance. One must be a financial limitation and one must be non-financial. [4]

10. Osgarth Tools had the following for the year.

Income statement: revenue 500,000 (400,000 on credit); opening inventory 40,000; purchases 320,000 (250,000 on credit); closing inventory 60,000; operating expenses 134,000; loan interest 6,000.

Statement of financial position: non-current assets 260,000; inventory 60,000; trade receivables 55,000; bank 5,000; trade payables 50,000; other payables 30,000; loan (non-current liability) 60,000.

(a) Calculate each of the nine financial measures and ratios in the specification. Award yourself one mark for each correct measure. [9] (b) Appraise the liquidity of the business. [3]

11. Ivorstone Printers made a profit for the year of 25,000. The profit is after a depreciation charge of 4,000. During the year the owner bought equipment for 15,000 and paid from the bank, took 8,000 in cash drawings, and saw inventory rise by 6,000 and trade receivables rise by 9,000. Assume no other changes affected the bank.

(a) Calculate the change in the bank balance. [3] (b) Explain two reasons why the bank balance moved differently from profit. [4]

Answers

1. Gross profit = 80,000 - 60,000 = 20,000. (a) 20,000 / 80,000 x 100 [1] = 25.0% [1] (b) 20,000 / 60,000 x 100 [1] = 33.3% [1] [4] Examiner insight: the two percentages share a numerator but not a denominator. Write the formula before substituting.

2. (a) Cost of sales = 14,000 + 97,000 - 18,000 [1] = 93,000 [1] (b) Average inventory = (14,000 + 18,000) / 2 = 16,000 [1]. Turnover = 93,000 / 16,000 = 5.8 times [1] (c) Inventory is sold and replaced more often [1], so less cash is tied up in inventory or there is less risk of it becoming out of date [1]. [6] Examiner insight: give the unit and use average inventory when both opening and closing figures are given.

3. (a) 22,000 / 120,000 x 100 [1] = 18.3% [1] (b) Capital employed = 95,000 + 25,000 = 120,000 [1] (c) 22,000 / 120,000 x 100 [1] = 18.3% [1] [5] Examiner insight: both profit figures are given; label each, then use profit from operations for both ratios, as OxfordAQA’s own 9215 mark scheme (Paper 2, May/June 2026) does.

4. (a) Current assets = 26,000 + 18,000 + 6,000 = 50,000. Current liabilities = 21,000 + 3,000 = 24,000 [1]. Current ratio = 50,000 : 24,000 = 2.08 : 1 [1] (b) Liquid capital ratio = (50,000 - 26,000) : 24,000 [1] = 1.00 : 1 [1] (c) The 2.08 : 1 ratio looks comfortable [1]. But over half of current assets is inventory [1]; without it cover is only 1.00 : 1, so the business depends on collecting receivables on time [1]. [7] Examiner insight: a comment gains credit when it uses both ratios and says what the gap between them reveals.

5. (a) 40,000 / 292,000 x 365 [1] = 50.0 days [1] (b) 27,000 / 219,000 x 365 [1] = 45.0 days [1] (c) The business pays suppliers about 5 days sooner than customers pay it [1], so it has to fund the gap, for example by an overdraft, unless it tightens credit control or negotiates longer terms [1]. [6] Examiner insight: a comment should compare the two results, not describe each separately.

6. (a) Cost of sales is 70% of revenue [1]. Revenue = 56,000 / 0.70 = 80,000 [1] (b) Gross profit = 80,000 - 56,000 = 24,000. Markup = 24,000 / 56,000 x 100 [1] = 42.9% [1] [4] Examiner insight: do not treat the 30% as a markup on cost. Check your answer by recalculating the margin.

7. (a) Current assets fall to 36,000 - 9,000 = 27,000 [1]. Ratio = 27,000 : 18,000 = 1.50 : 1 [1] (b) Current assets = 42,000 and current liabilities = 24,000. Current ratio = 1.75 : 1 [1]. Without inventory of 20,000, liquid assets = 22,000 [1]. Liquid capital ratio = 22,000 : 24,000 = 0.92 : 1 [1] (c) Profit rises now, because the revenue is earned when the sale is made [1]. The bank balance does not change until the customer pays [1]. [7] Examiner insight: in (b), the new inventory is also deducted for the liquid capital ratio.

8. (a) Year 1: gross profit 60,000, margin = 40.0%. Profit = 60,000 - 33,000 = 27,000, so 18.0% [2]. Year 2: gross profit 63,000, margin = 35.0%. Profit = 63,000 - 45,000 = 18,000, so 10.0% [2] (b) Revenue rose by 20% [1], but the gross profit margin fell by 5 percentage points [1], which could be due to dearer ingredients or price discounts [1]. Expenses rose by 36.4%, faster than revenue [1], so profit fell from 27,000 to 18,000 and profit in relation to revenue from 18.0% to 10.0%. Overall, profitability has worsened despite higher revenue, and the bakery needs to review both its costs and its pricing [1]. [9] Examiner insight: an appraisal usually needs figures, a reason and a judgement.

9. Financial limitation, for example: ratios use historic year-end figures [1], which may not be typical of the year or a guide to the future [1]. Non-financial limitation, for example: ratios cannot measure staff morale, reputation or customer loyalty [1], which can strongly affect future performance [1]. [4] Examiner insight: each limitation needs an explanation of why it matters.

10. (a) Cost of sales = 300,000. Gross profit = 200,000. Profit from operations = 66,000. Profit for the year = 60,000. Gross profit margin = 200,000 / 500,000 x 100 = 40.0% [1] Markup = 200,000 / 300,000 x 100 = 66.7% [1] Average inventory = 50,000. Turnover = 300,000 / 50,000 = 6.0 times [1] Profit in relation to revenue = 66,000 / 500,000 x 100 = 13.2% [1] Current assets = 120,000. Current liabilities = 80,000. Capital employed = 260,000 + 120,000 - 80,000 = 300,000. ROCE = 66,000 / 300,000 x 100 = 22.0% [1] Current ratio = 120,000 : 80,000 = 1.50 : 1 [1] Liquid capital ratio = 60,000 : 80,000 = 0.75 : 1 [1] Trade receivable days = 55,000 / 400,000 x 365 = 50.2 days [1] Trade payable days = 50,000 / 250,000 x 365 = 73.0 days [1] (b) The current ratio of 1.50 : 1 looks adequate, but the liquid capital ratio of 0.75 : 1 is below 1 : 1 [1], so the business would have to sell inventory to meet all its current liabilities [1]. Receivables are collected in about 50 days while suppliers are paid in 73, and the bank balance of only 5,000 leaves little margin [1]. [12] Examiner insight: write down the building blocks so a slip in one figure does not hide correct method elsewhere. In the appraisal, quote the figure you discuss.

11. (a) Start from profit 25,000 and add back depreciation of 4,000, which is not a cash cost [1]. Deduct equipment 15,000, drawings 8,000, increase in inventory 6,000 and increase in receivables 9,000 [1]. Change = 29,000 - 38,000 = a decrease of 9,000 [1] (b) Reason one: receivables rose by 9,000, so profit includes credit sales not yet paid in cash [1]; inventory bought and unsold also took cash [1]. Reason two: equipment of 15,000 and drawings of 8,000 used cash but are not expenses [1]; depreciation reduced profit but no cash left the bank [1]. [7] Examiner insight: name the transaction from the question in each reason and say whether it affects profit, cash or both.

Where marks are usually lost

• Dividing by revenue when calculating markup, or by cost of sales when calculating margin.
• Forgetting to use average inventory for the rate of inventory turnover.
• Mixing up profit from operations and profit for the year in ROCE and in profit in relation to revenue.
• Leaving inventory in the liquid capital ratio.
• Using total figures for the days measures when credit figures are supplied.
• Calling a ratio good or bad with no comparison or reason.

Next steps

• Re-read the revision notes and the study guide.
• Use the course hub and checklist.
• Try all the free 10-minute diagnostics.
• Book a free trial class: trial classes.

Frequently asked questions

Where do students usually lose marks on ratio questions in OxfordAQA International GCSE Accounting 9215? Common losses are dividing by the wrong base for markup or margin, forgetting to use average inventory for the rate of inventory turnover, and using total figures for the days measures when credit figures are supplied.

Can I call a ratio good or bad on its own? No. A ratio needs a comparison, such as last year or a similar business, and a reason. Calling a ratio good or bad with no comparison or reason loses marks.

Which profit figure should I check before calculating ROCE? Check whether the question needs profit from operations or profit for the year, because mixing them up in ROCE and in profit in relation to revenue is a common mistake.

How should I set out a ratio calculation? Write the formula, put in the figures and give the answer with its correct unit: a percentage, a number of times, days, or a ratio written as x : 1.

Official syllabus

OxfordAQA International GCSE Accounting (9215), specification version 1.2, for exams from May/June 2026 onwards, section 3.5: Interpretation, analysis and communication of financial information.