1. FINANCIAL STATEMENTS A2 Business Studies

2. Aims and Objectives Aim  To understand liquidity ratios and introduce profitability ratios. Objectives  All Will: Define different financial ratios.  All Will: Explain different financial ratios.  Most Will: Analyse liquidity ratios of Virgin Airlines.  Some Will: Evaluate liquidity ratios of Virgin Airlines.

3. Financial Ratios Competition

4. Starter: Liquidity Ratios  What are liquidity ratios used to measure?  What is the formula for the current ratio?  Calculate the current ratios for Virgin Airlines in 2006 and 2007 using the following figures:  Explain what these ratios mean for Virgin Airlines.  Has Virgin Airline’s liquidity improved between 2006 and 2007? If so, how? 20072006 Current Assets £6,321.4m£1,200.4m Current Liabilities £1,737.9m£1,700.7m

5. Starter: Liquidity Ratios  What is the acid test ratio formula?  Calculate the acid test ratio for Virgin Airlines in 2006 and 2007 using the following figures:  Explain what these ratios mean for Virgin Airlines.  Has Virgin Airline’s liquidity improved between 2006 and 2007 when you take out ‘Stock’? If so, how? 20072006 Current Assets £6,321.4m£1,200.4m Of which Stock £400.4m£100.5m Current Liabilities £1,737.9m£1,700.7m

6. Add up scores and return!

7. Collective Memory Task (12 Points)  Teams.  One team member leaves the room, and has 10 seconds to remember as much as they can from the poster outside the room.  They then come back in, and re-create the poster on your teams blank poster using board pens.  Winner is the team with the most accurate information on their poster in the fastest time.

8. Team Teaching (12 Points)  You have 10 minutes to prepare to present back to the class your poster and teach them each ratio.  You will gain marks out of 10 for: Content. (is the material correct?) Teaching (e.g. not looking at the poster to present). Pretty Pictures (which would help you remember that ratio).

9. Just Checking….. For each of the following write out the formula to calculate:  Operating Profit Margin  Current Ratio  Acid Test Ratio  Stock Turnover  Debtors Days  Dividend per share