Accountancy Mock: Ratios - Detailed Solutions

💡 Lucky's Topper Strategy

• The Complementary Formula: Keep in mind that Operating Ratio + Operating Profit Ratio = 100. Examiners often use this to test quick mental calculations.
• Cost vs. Sales Margins: Make sure you are comfortable switching between margins: a 25% margin on cost equals a 20% margin on sales, and a 33.33% margin on cost equals a 25% margin on sales.
• Transaction Effects: When analyzing how a transaction affects a ratio, plug in simple placeholder numbers (like 20,000 / 10,000 for a 2:1 ratio) to verify whether the value increases, decreases, or stays the same.