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Secondary ratios

Secondary ratios are supporting measures used to explore the drivers behind broader performance ratios. Use these measures to investigate the movement in a broader outcome. For example, an increase in receivables days can help explain pressure on liquidity, while inventory days can point to slower stock movement. Ratios suggest questions; supporting evidence is needed to explain causes. Choose measures relevant to the question and maintain the same formula across comparative periods.

Worked example

Inventory days and receivables days can help explain changes in working capital.

Common mistake

The label is informal; define the actual ratio and use consistent data.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA FA Supporting September 2026–June 2027
ACCA K1 Supporting July 2027–August 2028
FIA FFA Supporting September 2026–June 2027

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