ACCA Exam Tips March 2024

ACCA Exam Tips
 The secrets of exam success 

Important Topics

ACCA EXAM Tips March 2024 Important Topics

PM EXAM Tips (Performance Management)

  1. Activity-Based Costing
  2. Throughput Accounting
  3. Variance Analysis
  4. Linear Programming
  5. CVP
  6. Pricing
  7. Risk and Uncertainty
  8. Performance Management

TX EXAM Tips (Uk Taxation)

  1. Individual Income Tax along with Partnership
  2. Corporate Tax
  3. Vat
  4. Inheritance Tax
  5. CGT

FR EXAM Tips (Finance Reporting)

  1. Consolidation
  2. Final accounts
  3. Ratio
  4. MCQs can be from anywhere

Questions to practice Final Accounts

  • XTOL

Questions to practice Consolidation


Important Questions to practice Ratios & Cash-flow


AA EXAM Tips (Audit and Assurance)

  1. Ethic
  2. Corporate governance
  3. Reporting
  4. Internal Controls (sales, Payroll, Purchases)
  5. Substantive Procedures (Cash cycle, revenue, and fixed asset)

FM Exam Tips (Financial Management)

  1. Investment appraisal
  2. The weighted average cost of capital
  3. Forex
  4. Sources of Finance
  5. Working Capital

SBL EXAM Tips (Strategic Business Leader)

  2. Porter 5 Forces
  3. Human Resources
  4. Swot Analysis
  5. SFA Model
  6. Value Chain
  7. E . business, E-Marketing
  8. BCG Matrix
  9. Financial Information
  10. Internal Controls
  11. Corporate Governance
  12. Pestel/P5F/ Str Position
  13. Swot/Tows
  14. Corporate Portfolio
  15. Growth Strategies
  16. Culture
  17. E-Business / 61/ 7P
  18. IT Risk / Security / Cloud
  19. Harmon Process Matrix
  20. Context Change
  21. Outsourcing/ shared services
  22. Financial Proj/ Analysis
  23. Stakeholder/ Mendelow
  24. Prof/ Ethical behavior
  25. Agency / Conflict of Interest
  26. NEDs/ Board Comm
  27. Family-owned business
  28. Integrated Rep/ 6 Capita

SBR EXAM Tips (Strategic Business Reporting)

  1. Consolidated cash flow statement
  2. consolidated income statement
  3. IAS 19
  4. IAS 37
  5. IFRS 8
  6. IFRS 10
  7. IFRS 16
  8. IFRS 15
  9. IFRS 13
  10. IAS 38
  11. Financial Instruments

APM EXAM Tips (Advanced Performance Management)

  1. ABC
  2. BCG Matrix
  3. Ash-ridge Model
  4. Performance management
  5. Corporate Failure
  6. HR

AAA EXAM Tips (Advanced Audit and Assurance)

  1. Business Risk and ROMM
  2. Audit Procedure
  3. Ethic and quality control
  4. Sufficiency and Appropriateness of audit evidence or matters
  5. Due Diligence
  6. Forex
  7. Audit  report (Critical appraisal or matters)
  8. Current issue ED ISA540

However ACCA Exam Tips all are just guesses based on research and our Experience, Please do not ignore the other areas as well

See Also:

Preparing for ACCA exams can be daunting, but there are some steps you can take to set yourself up for success. First, make sure you understand the exam structure and regulations. Knowing what to expect on the test day can help reduce any excess anxiety. Next, create a study plan and stick to it. This can include attending classes, studying with a group or on your own, and taking practice exams to gauge your progress. It’s also important to take breaks during your studying, so you don’t burn out.

ACCA exams can be hard to pass, but with proper preparation, you can increase your chances of success. One helpful tip is to create a study schedule and stick to it. This will ensure that you cover all the essential topics and give yourself enough time to review.

It’s also important to practice with past exam questions and review any topics you struggle with before the exam day. Additionally, remember to take breaks and maintain a healthy lifestyle; stress and fatigue can impact your performance on the test. You can pass the ACCA exams and reach your goals with persistence and focus.

ACCA exams contain various question types, including many choices, written responses, and case studies. Each type of question serves a different purpose, ensuring that students are well-prepared for real-world application in the workplace.

Many choice questions test knowledge and understanding of a concept, while written responses assess problem-solving skills and the ability to communicate solutions. Case studies bring the concepts to life,

Requiring students to apply their understanding in a realistic scenario. The exam format also includes exercises, allowing students to demonstrate their practical financial analysis and reporting skills. Overall, ACCA exams provide a comprehensive assessment of a student’s competency in accountancy.

Stay Connected: Facebook


ACCA Qualification Structure

ACCA Qualification Structure

what is ACCA Qualification?

Careers after ACCA Qualification- Here is a detailed guideline about ACCA Qualification, Entry Route, Paper Structure, and ACCA course details- Start your journey toward Accountancy Qualification

ACCA Papers List

Applied Knowledge
AB- Accounting in Business
MA- Management Accounting
FA- Financial Accounting
Applied Skills
LW- Corporate And Business Law
PM- Performance Management
TX- Taxation
FR- Financial Reporting
AA- Audit & Assurance
FM- Financial Management
Strategic Professional
Essential Papers
SBL- Strategic Business Leader
SBR- Strategic Business Reporting
Optional Papers- Pass any two
AFM- Advance Financial Management
APM- Advance Performance Management
ATX- Advance Taxation
AAA- Advance Audit & Assurance
Applied Knowledge
AB- Accounting in Business
MA- Management Accounting
FA- Financial Accounting
Applied Skills
LW- Corporate And Business Law
PM- Performance Management
TX- Taxation
FR- Financial Reporting
AA- Audit & Assurance
FM- Financial Management
Strategic Professional
Essential Papers
SBL- Strategic Business Leader
SBR- Strategic Business Reporting
Optional Papers- Pass any two
AFM- Advance Financial Management
APM- Advance Performance Management
ATX- Advance Taxation
AAA- Advance Audit & Assurance

ACCA Qualification Requirements

  • If you have University entrance Level Certification Then you can start ACCA Directly from ”Applied Knowledge”

ACCA Qualification Levels:

Applied Knowledge: Accounting in Business (AB), Management Accounting (MA), Financial Accounting (FA). Applied knowledge has a total of 3 papers.

  • In case you don’t have University entrance Level Certification Then First you need to do Foundations Diploma, this diploma has 7 basic papers, after passing this your First 3 papers of ACCA will be Exempt and you can start ACCA qualification from ACCA’s 4th paper ”F4 Corporate law” directly
  • The next six papers called ”Applied Skills”

Now you have completed 9 papers, and you are eligible for ”Bsc in applied accounting from Oxford Brookes University”

  • Now Next level is Strategic Professional Level papers
  • Essentials Papers
  • Optional (Pick any two out of four)
  • Here your Academic study is Completed and you are an ACCA affiliate, But to become a member you need Experience of 36 Months in the relevant field,
  • Congratulation, Now you are a new member of the Worlds most forward-thinking Professional Accountancy Body

Why choose ACCA Qualification?

Let me give you reasons o choose ACCA Qualification

  • you’ll discover a world of opportunity with 188,000 Members and 480,000 students in 178 countries. you will become part of a global network, you will get a qualification That’s recognized around the world.
  • And you can tailor your studies for local law and tax to suit wherever you want to go
  • Employers Trust ACCA, with 110 years of experience so employers trust ACCA to deliver skilled professionals, which ACCA does to 7400 employers around the world and ACCA has Careers Giving to students and members the career portal and the job board with thousands of vacancies waiting to be filled.
  • Automatic Network: once you become an ACCA member you will get access to thousands of finance professionals in ACCA member’s LinkedIn group, Providing with invaluable connection and potential mentoring opportunities, Or get involved through face to face networking events in your local area of students and members and connect with fellow students through the virtual learning community.
  • ACCA studies are Brilliantly flexible, what to study full time? or fit your studies around work? No problem, study on your own with one of ACCA’s many approved learning partners face to face with tutors or choose a mix of all three or you could use ACCA-x and. study online you can even gain a BSC degree from Oxford Brookes University and a globally recognized MSC degree from the University of London at the same time. ACCA’s specialism options allow you to be an expert in your chosen field
  • Quality Control? check! The material you use and the people who teach you have to meet ACCA’s high stander, and ACCA’s approved learning partners that have been specially selected are regularly assessed.
  • ACCA’s Staff is always available to Support you, ACCA’s website has messes of online material including study guides, past papers, and inspirational articles from top people. Who were once just like you, will also work hard to make exams flexible and convenient. ACCA always thinking ahead and looking for fresh ways to help the student.
  • There’s already twenty-four seven support and tips with the ACCA learning community and if English isn’t your first language BPP university can provide you with tailored English language support

This is the opportunity to get the right skills and knowledge to build your career as a Finance Professional

Accountant Salary: according to a survey an ACCA member earns 28000+ British pounds annually.

ACCA Member acca qualification

ACCA Qualification Cost

The total cost of ACCA Qualification according to my estimate can be around 3000 Pounds in total in a normal situation. The cost of ACCA Qualification can vary from situation to situation, person to person, and country to country. Every time you need to check the latest ACCA Exam Dates you can click here.

ACCA Qualification Salary:

jobs with ACCA Qualification
benefits of ACCA Qualification

ACCA Qualification equivalent

ACCA provides 4 attempts in a year, a total of 8 attempts in 2 years, and a total paper of ACCA 13, So this is very much possible to pass ACCA within two years.

No, it’s not, ACCA is a global body of professional accountants providing certification at a reasonable cost, ACCA will pay you in practical life after certification.

ACCA can be completed within 2 years.

You can pay ACCA’s fees with your Credit card or Debit card.

Honestly no, you need an ACCA-approved tuition provider.

To become a certified ACCA member, individuals must pass 13 exams and fulfill a minimum three-year relevant work experience requirement. ACCA also offers to continue professional development courses to help members stay current in their field. ACCA membership has multiple benefits, including access to networking events and job opportunities with top accounting firms.

If you still have any queries you can Contact US, we will be happy to assist you.

Read more: ACCA Official website


ACCA PM Video Lectures

ACCA PM Video Lectures

ACCA Performance Management

Previously known as F5

ACCA PM Video Lectures For students, for exam preparations within one week online lectures, Course Refresher in last days of the

Day 1

Day 2

Day 3

Day 4

Day 5

Performance Management is a mixed paper of Theoretical + Theory areas

Most Examiner focus on Theoretical Aspects of the paper, don’t try to selective study as MCQs can be from any area of PM (Performance Management),

and this paper demands practice as much as you, Practic Practic Practic. this assures your success in the,

And another thing is its also a time saver in exam time if you are used to solving questions then you can solve questions more quickly in Exam pressure,

ACCA PM Video Lectures will help you to refresh your course in five days, take one video daily and that day only solve questions related to that topic,

And don’t try to copy answers from any answer sheet because there is no paper to copy from you will need to solve by yourself.

Students Good Luck with your exams in the coming attempt, you can Contact US if you need any kind of help with your papers, study hard

The main focus of these lectures focus on CBE, techniques, approaches, paper style, and how to manage time

Days wise plan:

  • Day 1: Costing and Decision (Pricing & CVP)
  • Day 2: The decision making (Limiting factor, Relevant costing, Risk)
  • Day 3: Budgeting & Control
  • Day 4: Performance Management
  • Day 5: Questions and answer session

Read More: AAA Video Lectures

Find Us on Facebook

ACCA Exam Dates

acca exam dates timetable

ACCA Exam Dates and March 2024

ACCA Exam dates for March 2024, June 2024, And September 2024 ACCA Exams Deadline

acca exam dates

Exam start times

Details of local start times can be found on the Exam Planner and will be stated on exam dockets. acca exam timetable is available to book your exam timely

March 2024

ACCA Exams Date for 5 – 9 March 2024

Monday 5 December 2022 Tuesday 6 December 2022Wednesday 7 December 2022Thursday 8 December 2022Friday 9 December 2022
Audit and Assurance (AA) Taxation (TX)Performance Management (PM)Financial Reporting (FR)Financial Management (FM)
Advanced Audit and Assurance (AAA) Advanced Taxation (ATX)Advanced Performance Management (APM)Strategic Business Reporting (SBR)Advanced Financial Management (AFM)
Strategic Business Leader (SBL)Technical
Law (LW)
ACCA Exam dates for December 2022
Early exam entry deadline date – 9 August 2022
Stander exam entry deadline- 31 October 2022
Late exam entry deadline – 7 November 2022
December 2022 Exam Result will be released on 16 Jan 2023

June 2024

ACCA Exams Date for 6 – 10 June 2024

Monday 6 March 2023Tuesday 7 March 2023Wednesday 8 March 2023Thursday 9 March 2023Friday 10 March 2023
Audit and
Taxation (TX)Performance Management (PM)Financial
Management (FM)
Audit and
Assurance (AAA)
Performance Management (APM)
Management (AFM)
Advance Taxation (ATX) MYSCorporate
Law (LW)
ACCA Exam dates for March 2023
Early exam entry deadline date - 10 Aug 2022
Stander exam entry deadline- 31 Jan 2023
Late exam entry deadline - 2 February 2023
March Result Release Date: 18 April 2023

September 2024

ACCA Exams Date for 5 – 9 September 2024

Monday 5 June 2023Tuesday 6 June 2023Wednesday 7 June 2023Thursday 8 June 2023Friday 9 June 2023
Audit and Assurance (AA)Taxation (TX)Performance Management (PM)Financial Reporting (FR)Financial Management (FM)
Advanced Audit and Assurance (AAA)Advanced Taxation (ATX)Advanced Performance Management (APM)Strategic Business Reporting (SBR)Advanced Financial Management (AFM)
Strategic Business Leader (SBL)Technical Role Simulation (TRS)Corporate and Business Law (LW)
ACCA Exam dates for June 2023
Early exam entry deadline date - 8 February 2023
Stander exam entry deadline- 2 May 2023
Late exam entry deadline - 9 May 2023
June 2022 Exam Result will be released on 18 July 2023

Yes, you can change or cancel the exam entry before the stander entry date.

ACCA exams are held 4 times a year, In March-June-September and December

Exam time will be available on your docket, issued by ACCA. ACCA also states that candidates should arrive at the exam venue at least 30 minutes before the exam starts to complete registration procedures and be seated by the official start time. As always, it’s better to err on the side of caution and arrive even earlier to avoid any last-minute hiccups. Good luck!

ACCA exams are one of the essential steps in becoming a certified accountant, so, understandably, you may feel nervous about your upcoming exams. Fortunately, ACCA offers the option to postpone or defer your exam bookings to a later date. This can only be done with valid reasons and within ACCA’s set deadlines. For example, if you have a medical emergency or need extra time to study, ACCA allows you to reschedule your exam date.

However, it is essential to note that ACCA will not refund any fees associated with the postponed exam, and additional fees may be incurred for the rescheduling. So before making any significant changes to your exam schedule, carefully review ACCA regulations and weigh the potential cost and benefits. This way, you can focus on preparing for success on your ACCA exams without added stress or financial burden.

Also Visit:


SBL Tips and Techniques

How to pass ACCA SBL - Tips and Techniques

How to pass SBL – Tips and Techniques

This is a technical article on how to pass SBL and SBL Tips and Techniques for students.

  1. One of the issues students face in the exams is to handle the case study in the allotted time.
  2. To handle this exam effectively and efficiently, You, must plan your paper for 40 to 50 Mins at least and then start a draft answering the answers…
  3. If you think that it is just a combo of P1 and P3 sorry folks you are absolutely wrong here. A lot of new techniques are involved in it.
  4. Another thing which makes this paper the unique it has 80 Knowledge marks and 20 Professional Marks, and if you plan that you will focus on Knowledge area and ignore the Professional marks and Strategy it is folks
  5. To get those professional marks you must work on these professional skills Communication, Commercial Acumen, Analysis, Scepticism, and Evaluation.
  6. You must know, how to Apply knowledge into the application of Scenarios
  7. Learn concepts and how to draft answers and pass this Beast paper

The Recommended approach

  • Read information in the sequence (Background, List of exhibits, task, exhibits)
  • Link tasks to exhibits when reading exhibits
  • Highlight relevant and useful information
  • Once scenario read, read requirements again
    • Be certain about what is being asked
    • Verb
    • Rule of AND
    • No professional marks if technical answer incorrect

Writing Skills in SBL Tips and Techniques

  1. Sentences should be short and to the point
  2. Each point in a separate paragraph
  3. Leave space between the paragraph
  4. include heading and subheadings but not excessively so
  5. Answer Questions in Numerical Order (Preferred)
  6. Don’t define the framework
  7. The Formate: Cant get full professional marks if formats not used correctly

Professional Marks

  • Making the most important or crucial points.
  • Only making relevant points and not including extra information or wrong or unsupported points.
  • A not repeating point already made.
  • Use short sentences
  • Use headings to break down information into the clearly identifiable section

In the words of the examiner

Time Management

250 minutes available
-40 minutes: Read the case study, plan the answer (Read all pages end to end, know where to find relevant information easily when writing)
-200minutes: individual requirements:
prepare for and answer (100 marks so 2 minutes per mark)
-allocate time for each part

Effective Reading

-No point in skimming through the paper-
no choice in the exam
-Read info in the sequence given
-Link task to exhibits when readings
-highlight relevant and useful information

Analyzing the requirements

-Be certain about what is being asked
-No professional marks if technical answer incorrect
-Rule of AND
-Translate into your native Language


-Plan the whole exam before answering any part of the paper because of the integrated nature of the case information.
-One requirement may directly or indirectly relate to the next one
-Can cross reference answer instead of wasting time
-Decide how many points need to be made
(1 mark for 1 point usually in SBL- another mark for the same point possibly if fully
-Use syllabus and previous knowledge when identifying points you will later write but link it to the case
-Be aware of the professional marks

Writing Skills

-Get into the character of the task
-be aware of what you are being asked to do and who they answer is for (the audience)
-Answer the requirement
-The breadth of issues (Depth of the discussion by applying syllabus knowledge to the scenario but not excessive).
-Sentences should be short and to the point (2-4 sentences for each point)
-Each point in separate paragraphs
-Include headlines and subheadings but not excessively so

Share these Articles with your friends!

Read More: Exam tips for Audit & Assurance

Follow us on Facebook

What is Audit and Inherent Limitation of Audit

what is Audit? Inherent Limitation of Audit

What is Audit and Inherent Limitation of Audit

Audit: The practitioner examines the subject matter made available by the responsible party, matches it to the suitable criteria using evidence and reports to the intended users. (Audit also have inherent limitation) see below.


An audit is an Independent Examination of Financial Statements.

What is Audit
What is Audit


Company is an artificial legal personality which owns by the shareholders, And Run by Board of Directors, The real Owners of the company are shareholders, Shareholders delegate their authority to the directors, So they can run the company on the behalf of shareholders.

Here Shareholders are the Principle owners and BOD are the agents. This also called the agency relationship. The Directors are the caretaker of Shareholder’s investment, Funds, Assets Everything in Company.

Now Directors Duty to Run the Company in the Best interest of shareholders, Maximising the shareholders wealth, have to establish the controls, Establishing the accounting system, Maintaining the accounting Record, Preparation of Financial Statements, Publishing Financial Statements, Conducting AGMs (Annual general meetings) etc etc For the sake of their Principle Owners (Shareholders).

In the end BOD’s Publish Financial Statement. These Financial statements actually announcing the performance Or work done by directors,

Now think Directors are performing the task all over the year and now announcing their results, Now shareholders how can relay on these Financial statements, Made by the Directors about their performance,

Now shareholders want an INDEPENDENT competent person, who is (Unbiased, Neutrality, qualified, Impartial). So they can give an Independent Opinion On FINANCIAL STATEMENTS. This called Audit (Audit is Independent Examination of Financial Statement.)

Highlight: Audit is not a guarantee, Audit is Independent Examination of Financial Statement And at the end, Auditor gives Independent Opinion on Financial Statements Weathers its Presents TRUE and FAIR view or not in all material aspects.

Inherent Limitation of Audit


Why Auditor cannot give an absolute opinion

1. Sampling –For auditors, it is not practical to test 100% of transactions and so they have to apply the sampling method in selecting balances/transactions to test. Therefore, there can be an error in an item not selected for testing by the auditor.

2. Subjectivity – financial statements include judgmental and subjective areas and therefore the auditor is required to use their judgment in assessing whether the financial statements are true and fair.

3. Inherent limitations of internal control systems – an internal control system is operated by people and hence is liable to human error. As well, there is the possibility of controls override by management and of collusion and fraud. It is not possible to remove all of these inherent limitations and as the auditor relies on the internal control systems, this can reduce the usefulness of the audit.

4. Evidence is not conclusive But persuasive: therefore opinion depends on audit evidence collected by Auditors; however, this evidence can identify possible issues affecting the audit opinion, evidence involves estimates and judgments and hence does not give an absolute conclusion.

5. Even if everything reported on was examined and found to be satisfactory, there may be other items which should have been included– the completeness problem.

6. Auditors plan their work to detect material errors and frauds only – so small frauds (or large frauds split into many small amounts) may go unnoticed.

an external audit has a number of other issues which reduce its usefulness

1. Audit report format – the format of the opinion is determined by International Standards on Auditing. However, the terminology used is not usually understandable by non-accountants. This means that users of Financial Statements may not actually understand the audit opinion given.

2. Historic information – the audit report is often issued sometime after the year-end, and so the financial information can be quite different from the current position. In the current circumstance marketplace where companies’ financial positions can change quite quickly, the audit opinion may no longer be relevant as it is outdated.

3. Auditors need to understand their clients in great depth if they are to understand how fraud could be carried out and hidden. However, auditors cannot become too close to their clients or their independence will be called into question.

4. Where auditors spot errors or fraud, their primary legal responsibility is to report this to management. Any external reporting is hampered by rules on confidentiality.

See Also: Analytical Procedures

Audit and Assurance Video Lectures


Analytical Procedures

Analytical Procedures

Analytical Procedures in Audit

In audit Analytical Procedures that seek to provide evidence as to the completeness, accuracy, and validity of the information contained in the accounting records or in the financial statements.

Analytical Procedures consists of the systematic study and comparison of relationships among elements of financial information and the investigation of significant fluctuations and variances from the expected relationship

Examples of Analytical Procedures
Examples of Analytical Procedures

Steps involved in analytical procedures

  1. Expectation: This step involves developing an expectation of what the financial information figures should be. This can be agreed upon through comparisons of financial information or considerations of relationships (ratio analysis).
  2. Identification: This step involves the identification of significant variations between the actual data with the expected data.
  3. Investigation of unusual variances: Once the variation has been computed, and if significant variations are found, the auditor would consult the management in order to establish explanations for the variations revealed.
  4. Performance of alternate procedures: If the auditor or the management does not find the variation reasonable, then they investigate further and perform analytical procedures to satisfy themselves.

When performing an analytical procedure, the auditor compares numbers, ratios or even non-financial information in order to identify unexpected trends or unexpected relationships, which may indicate the existence of errors.

There are many different analytical procedures including the comparisons listed below

  1. Year on year (e.g. revenue this year compared to revenue last year);
  2. To budget or forecast (e.g. actual purchases compared to budgeted purchases);
  3. To predictions made by the auditors-proof in total (e.g. auditor’s calculation of depreciation compared to the client’s calculation);
  4. Through industry information (e.g. client’s revenue compared to competitor’s revenue).
  5. Comparison/analysis of relationships between different elements of the financial statements ( for example gross profit compared to sales)
  6. Comparison of financial info with non-financial info ( for e.g. payroll expense matched to the number of employees)
  7. Non-financial information. For Example, sales revenue for a client from the hotel industry may be available data as to room occupancy rates basis.
Analytical procedures at various stages of audit
Analytical procedures at various stages of the audit
Analytical Procedures at the
Planning stage
To assist the auditor in the planning stage the
nature, timing, and extent of other
audit procedures. Use at this stage
should add to the firm’s
understanding of the business and
identify the risky areas in which audit
resources should
be targeted.
Analytical Procedures at 
substantive testing stage
at the detailed testing stage –
in most instances analytical
procedures should be used in
conjunction with tests of detail
to achieve a particular audit
the objective in relation to specific
financial statement assertions..
Analytical Procedures at 
the Review stage
At the final review stage the
the auditor must design and perform
analytical procedures that assist
him when forming an overall
conclusion as to whether the
financial statements are consistent with the auditor’s understanding
of the entity and that all of the
objectives with regard to the
financial statements have been

Using Ratios

In the Paper Audit and Assurance exam, you may be asked to compute and interpret the key ratios used in analytical procedures at both the audit planning stage and when collecting audit evidence. Ratios and comparisons can be used to identify where the accounts can be wrong, and where additional auditing effort needs to be spent.


Ratio Analysis Plays a key Roll to determine the business circumstance, here are a few Ratios are given below.

In the examination, you will be asked to calculate and interpret the ratios used in analytical procedures at the audit planning stage and when collecting audit evidence. Ratios and comparisons can be used to identify where the accounts might be wrong or right, and where additional auditing effort should be a need to spend. 

Calculating a ratio is an easy step, divide a number by another number, the calculations are so basic that they can be calculated using a spreadsheet.

The real skill is the interpretation of results and using that information to conduct out a better audit. Saying that a ratio has increased because the top line in the calculation has increased or the bottom line decreased is rather had no point, this is simply translating the calculation into words. the interpretation is another thing. 

Gross Profit Margin: Gross profit/Sales Revenue x 100

Operating profit margin =Operating profit/Sales Revenue x 100

Return on capital employed (ROI) = Operating profit/ Capital employed x 100

Current Ratio= Current Assets/Current Liabilities

Quick ( or asset test) ratios =Current assets minus inventory/ current liabilities

Inventory holding period or Inventory days =Inventory/Cost of sales x 365

Receivable days/ Receivables collection period =Trade receivables/Sales x 365

Trade payable Days/Payables payment period =Trade payables/Cost of sales x 365

Interest cover = profit before interest/ interest

Gearing = Long-term loan finance/ equity finance x 100  The gearing ratio can also be defined 
in other words, particularly by comparing long-term loan finance to total finance.

As the gearing ratio increases so risk that the interest can’t be paid. But it is difficult to define a
‘safe’ level of gearing. an example is , a property company with properties leased to tenants will have a fairly rental income for one year. 

Such a company can probably safely sustain substantial borrowings (though it could be in trouble if interest rates increased significantly). 

A company with volatile streams of income would have to keep its gearing lower as it must ensure that they have the ability to pay interest during the lean times. 

Read More:

Visit Us on Facebook