F3

Question 1

Not for profit value for money measures:

Answer 1

Economy – spend less

Efficiency – spend well (get maximum out of resources)

Effectiveness – spend wisely (don’t stretch resources so far that objectives can’t be met)

Equity – Spend fairly (extent services reach all people intended)

Question 2

Operating Profit Margin =

Answer 2

Op profit / revenue x100

-> shows how much each unit generates towards a profit

Question 3

Gross Profit Margin =

Answer 3

Gross profit / revenue x100

-> shows what proportion of revenue is left after cost of sales.

Question 4

ROCE =

Answer 4

(Operating profit / Capital Employed) x100

Question 5

Asset Turnover =

Answer 5

Revenue / Cap employed

Question 6

ROCE = X * X

Answer 6

ROCE = Op profit margin x asset turnover

Question 7

ROE =

Answer 7

(Net profit (post tax!!) / Equity) x100

Question 8

EPS =

Answer 8

(profit AFTER tax, interest & preference divis) / No. shares

Question 9

P/E =

Answer 9

share price / EPS

-> company’s share price vs earning per share

Question 10

Dividend Cover =

Answer 10

EPS / DPS

-> how many times divis can be paid for from profits

Question 11

Dividend Yield =

Answer 11

DPS / Share Price

-> what % return is being made on a share

Question 12

Total Annual Return to Investors =

Answer 12

(closing share price – opening share price) + Dividend / Opening share price

Question 13

Gearing =

Answer 13

Debt / Equity OR Debt / (Debt + Equity)

-> Calculates size of fixed interest capital compared to total capital

Question 14

Interest Cover =

Answer 14

operating profit(PBIT) / Finance charges

-> Measures how much of your profits are consumed by interest payments

Question 15

Calculating the growth rate of given figures =

Answer 15

^no. years√(ending figure/staring figure) -1

Question 16

Forward rate of exchange =

Answer 16

spot rate of exchange x [(1 + variable interest rate) / (1 + base interest rate)]