ratio analysis
If someone is interested in buying shares in Cadbury, they will want to know how “financially healthy” the organisation is before they invest their money in the company. One way of assessing a company’s performance is through ratio analysis calculations. These include:
- Gross profit
- Net profit
- Gross profit ratio
- Net profit ratio
- Current ratio
- Acid-test ratio
- ROCE
Your tasks
1. Your first task is to test your knowledge of the formulas for the first four ratio analysis calculations by completing this interactive activity.
If you have any problems using the activity, speak to your teacher. You may need to download and install Flash 8.
For a text version click here (this will open in a new window).
2. Your second task is to work through the next six screens and practise using ratio analysis to assess Cadbury’s performance in 2005 and 2006.
Download this spreadsheet and save it to your computer. You’ll need to enter all your calculations here. You’ll need to refer to the Financial information sheet, which includes the Cadbury balance sheet and profit and loss account for 2005 and 2006. (The gross and net profit figures have been deleted from the profit and loss account as you will be working these out for yourself.)
You’ll also need a calculator.
