Chp 1: Strategic Objectives

Question 1

Total Shareholder Return (%)

Calculation

Answer 1

(Dividend per share + Capital Gain) /
(Share Price at the start of the year)

Mulitply all by 100 to get %

Question 2

Share Price

Caluclation

Answer 2

P/E Ratio * EPS

P/E = Price/Earnings Ratio, EPS = Earnings per share

Question 3

Earnings Per Share (EPS)

Answer 3

(Profits distributable to ordinary shareholders) /
(Number of ordinary shares)

Question 4

Return on Shareholders funds (equity)

Answer 4

(Earnings) /
(Shareholders funds)

Question 5

Gearing

Formula

Answer 5

(Debt) /
(Debt + Equity)

Or just Debt / Equity

Question 6

Interest Cover

Formula

Answer 6

(PBIT) /
(Interest)

PBIT = Profit before Interest and Tax

Question 7

Growth over periods

Answer 7

(nth root((Latest Dividend) / (Earliest Dividend)) - 1

n = number of growth periods

Question 8

Interest Rate Parity

Formula

Answer 8

So * ((1+variable interest rate) / (1+base interest rate))

So = spot interest rate

Question 9

What is the definition of interest rate parity?

Answer 9

A method of predicting foreign exchange rates based on the hypothesis that the difference in the interest rates in the two countries should offset the difference between the spot rates and the forward foreign exchange rates over the same period.

Question 10

What are the 4 areas of a balanced scorecard?

Answer 10

1. Customer Relationships Perspective
2. Internal Business Persepctive
3. Innovation and Learning Perspective
4. Financial Perspective

Question 11

What are the three fundamental concepts of the Integrated Reporting (IR) Framework?

Answer 11

1. Value creation - Increases, decreases or transformations of capitals creates value
2. The Capitals - human, manufactured, financial, social, natural, intellectual
3. The value creation process - The process to convert capitals into outputs (including waste)