Integrated Analysis
What the exam tests
Integrated Analysis tests your ability to combine financial statements, tax, cash flow and non-financial data into a diagnosis. The case may ask you to explain a deteriorating position or recommend corrective action.
Core rules
- Read the story in the numbers: revenue growth versus receivables growth, margin versus cash, debt versus interest cover.
- Use ratios comparatively: prior year, budget and industry peer, not in isolation.
- Reconcile profit to operating cash flow; growing profit with falling cash usually signals working-capital strain.
- Check tax and dividend cash outflows; they can turn an operating surplus into a funding gap.
- Separate symptom from cause; recommend actions that address the cause.
Worked example
Current ratio is 1.2, quick ratio 0.7, interest cover 3 times and gearing 60%. Inventory days rose from 60 to 95 and receivables days from 45 to 70. Profit is ₦30m but operating cash flow is negative ₦5m. Diagnosis: profit is trapped in inventory and receivables; liquidity is weak and interest cover is thin. Recommendation: tighten credit control, sell slow stock, renegotiate supplier terms, suspend the dividend and discuss covenant headroom with lenders. Reasoning: the quick ratio and cash conversion, not the current ratio alone, show the risk.
Traps
Drawing conclusions from one ratio; ignoring seasonality or a change in accounting policy; using profit as a proxy for cash; and recommending cost cuts without linking them to the cash shortfall.