A-LevelAccountingAnalysis and communication of accounting information9706/12 · Oct/Nov 2014 · Q211 Mark
Analysis of a business's financial statements shows the following. net profit ratio (%) inventory turnover (days) 2011 21 62 2012 23 58 2013 26 53 Revenue has stayed the same over the three years. Which statement is correct?
AProfitability is decreasing and inventory is decreasing.
BProfitability is decreasing and inventory is increasing.
CProfitability is increasing and inventory is decreasing.
DProfitability is increasing and inventory is increasing.
✓ Correct answer
C: Profitability is increasing and inventory is decreasing.
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