Interpretation Of Accounts Test 2017

Question 1

Formula Divedend yield

Answer 1

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

Question 2

Formula Divedend per share

Answer 2

Value of ordinary dividend
Dividends per share=____________________________ = Cents
Issued share capital

Question 3

Formula Return on equity funds (shareholders funds)

Answer 3

Net profit (after tax and preference dividend)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ =cents 
Shareholders fund + profit and loss balance

Question 4

Formula earnings per share

Answer 4

Net profit -preference divedend
____________________________________ =cents
Number of ordinary shares issued

Question 5

Formula interest cover

Answer 5

Net profit (before tax and interest) 
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ =times
Interest for year

Question 6

8 steps to advise bank manager

Answer 6

1 Profitability (ROCE)
2 Liquidity (Acid Test Ratio)
3 Gearing (Gearing Percentage)
4 Dividend Policy (Dividend Yield +Cover)
5 Security (Fixed Asset Ratio)
6 Sector 
7 Purpose Of Loan
8 Conclusion

Question 7

Formula Return on capital employed

Answer 7

Net profit (before tax and interest)
_____________________________________
Capital employed

Question 8

Acid test ratio

Answer 8

Current Assets-closing stock
________________________________ = X:Y
Current Liability

Question 9

Gearing Percentage

Answer 9

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

Question 10

Gearing

Answer 10

Must calculate gearing with/ without loan

Question 11

Dividend cover

Answer 11

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

Question 12

Fixed asset ratio

Answer 12

• Investments have increased from 100 to 120
• Fixed assets 830
• Tangible assets 580 - 220. Leaves 380 as security for loan
• Take away 200 from debentures for loan and 20 increase in investment

Question 13

Why Employees Interpret accounts

Answer 13

-Job security
-Shareholders dividend increasing use as bargaining for pay rise
-Access pension security
-to see if company expanding chance of promotion
-

Question 14

Who would be interested in company’s accounts

Answer 14

Shareholders 
Banks 
Trade creditors
Revenue 
Competitors

Question 15

How to figure out rate of stock turnover

Answer 15

Formula cost of sales/average stock =10
Find average stock
Then find takeaway opening