Interpretation Of Accounts Test 2016

Question 1

Price Earing Ratio

Answer 1

Market price for share
________________________ =Times
Earning per share

Question 2

Formula Dividend Yield

Answer 2

Dividend per share
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_  X 100
Market price per share 
*Takeaway preference divedend*
Then use dividend per share

Question 3

Cash purchase

Answer 3

Cash purchase = Total purchase-credit purchase

                                 Trade creditors  Credit purchase =\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ X 12
                                            2

Question 4

Formula Return on capital employed

Answer 4

Net profit (before tax and interest)
_____________________________________
Capital employed

Question 5

Dividend cover

Answer 5

Net profit (before tax +interest)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = X:Y
Value of ordinary shares paid

Question 6

6 information for shareholders

Answer 6

1 Profitability (ROCE)
2 liquidity (ACID)
3 Gearing (gearing ratio)
4 Dividend (dividend cover +yield) 
5 Sector 
7 Conclusion

Question 7

Gearing percentage

Answer 7

Debt Capital
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ X 100 = %
Equity Capital 
-low geared company below 50%
-High geared company above 50%
-Neutrally geared = 50%

Question 8

Gearing

Answer 8

The capital structure of a business

It show the breakdown between debt and equity in a business

Question 9

Benefit of low gearing

Answer 9

• does not owe as much money to bank which they must pay
• low interest
• Room for emergency loan

Question 10

2 ways to reduce gearing

Answer 10

• Pay off loans when you get a lump sum of money

- sell more shares