Interpretations of accounts Q5

Question 1

Current ratio

Answer 1

Current Assets: Current Liabilities (ratio)

Question 2

Acid Test/quick ratio/liquid ratio

Answer 2

Current Assets - Closing stock: Current Liabilities (ratio)

Question 3

Fixed Interest capital to total capital

Answer 3

Loans + Debentures + Preference shares x100/capital employed ( % or ratio)

Question 4

Fixed Interest Capital to equity capital

Answer 4

Loans + debentures + preference shares x100/ ordinary issued share capital + reserves (% or ratio)

Question 5

Interest Cover

Answer 5

Profit before interest + tax/ interest charges for the year (times)

Question 6

Stock Turnover

Answer 6

Cost of sales/average stock (times)

Question 7

Average stock

Answer 7

Closing stock + opening stock / 2 (euro)

Question 8

Average period of credit given to Debtors

Answer 8

Trade Debtors × period 12,52,365/ credit sales (correct period)

Question 9

Average period of credit received from creditors

Answer 9

Trade creditors × period 12,52,365/ credit purchases (correct period)

Question 10

Total Assets Turnover

Answer 10

Sales/ Total Assets (Times)

Question 11

Fixed Assets Turnover

Answer 11

Sales/Fixed Assets (times)

Question 12

Current Assets Turnover

Answer 12

Sales/ Current assets (times)

Question 13

Working capital/ Net current Assets Turnover

Answer 13

Sales/ Net Current Assets (times)

Question 14

Earnings per share (EPS)

Answer 14

Net profit after preference dividend/ number of ordinary shares issued (cent)

Question 15

Price earnings ratio

Answer 15

Market price per share/ earnings per share (years/times)

Question 16

Dividend per ordinary share

Answer 16

Ordinary dividends ×100/ number of ordinary shares issued (cent)

Question 17

Dividend yield

Answer 17

Dividend per ordinary share ×100/ market price per ordinary share (%)

Question 18

Price dividend ratio

Answer 18

Market price of share /dividend per share (years)

Question 19

Return on capital employed (ROCE)

Answer 19

Profit before interest + Tax ×100/ capital employed (%)

Question 20

Return on share holders equity funds

Answer 20

Net profit after tax and preference dividend ×100/ shareholders’ funds (%)

Question 21

Gross Profit mark-up percentage

Answer 21

Gross profit ×100/ cost of sales (%)

Question 22

Gross Profit Margin percentage

Answer 22

Gross profit×100/ sales (%)

Question 23

Net profit percentage

Answer 23

Net profit before interest and tax ×100/ sales (%)

Question 24

Total Expenses to Sales

Answer 24

Total expenses ×100/ sales (%)

Question 25

Administration expenses to sales

Answer 25

Administration expenses ×100/ sales (%)

Question 26

Selling + Distribution expenses to Sales

Answer 26

Selling + Distribution expenses ×100/ Sales