Paper 2 · Ratio Analysis
Ratio analysis allows a large manufacturer to
Acompare performance over time and against rivals
Beliminate the need to prepare any accounts
Cset the wage rates paid to its factory operatives
Ddecide which of its employees should be promoted
Explanation: A ratio turns absolute figures into a relationship, which is what makes comparison possible between one year and another, or between a firm and its competitors of different sizes. Profitability, liquidity, efficiency and gearing can all be tracked this way.
Derived from ZIMSEC Business Enterprise Skills Paper 2, Specimen Paper, Q5