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
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Supporting | September 2026–June 2027 |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| FIA | FFA | Supporting | September 2026–June 2027 |
