While IGCSE Business Studies (0450) is mostly an essay-based subject, Paper 1 and Paper 2 will almost always include a few calculation questions regarding finance and accounting. These are easy, guaranteed marks if you know the formulas.
Profitability Ratios
- Gross Profit Margin = (Gross Profit / Revenue) × 100
- Profit Margin = (Profit / Revenue) × 100
- Return on Capital Employed (ROCE) = (Profit / Capital Employed) × 100
Liquidity Ratios
- Current Ratio = Current Assets / Current Liabilities
- Acid Test Ratio = (Current Assets - Inventories) / Current Liabilities
Pro Tip: If a question asks you to 'evaluate the liquidity of the business', calculating the acid test ratio without being explicitly asked to will instantly boost you into the top marking band.
Break-Even Analysis
- Break-Even Point = Fixed Costs / (Selling Price - Variable Cost per unit)
- Margin of Safety = Current Sales - Break-Even Sales
Use RevisionGrid to find past Paper 2 case studies and practice extracting these numbers from the complex balance sheets provided.