Question 1

Financial solvency refers to the ability of an entity to:

Accepted Answer

A)  meet its long-term obligations. 
B)  earn a high rate of profit. 
C)  improve sales. 
D)  Both A and B. 
A)  meet its long-term obligations. 
B)  earn a high rate of profit. 
C)  improve sales. 
D)  Both A and B.

Question 2

Dividends announced during the period divided by the number of shares on issue is the formula for:

Accepted Answer

A)  the dividend yield ratio. 
B)  the dividend per share ratio. 
C)  the dividend payout ratio. 
D)  the return on dividends ratio. 
A)  the dividend yield ratio. 
B)  the dividend per share ratio. 
C)  the dividend payout ratio. 
D)  the return on dividends ratio.

Question 3

Using the formula,gearing ratio = long-term liabilities/ (shareholders' funds + long-term liabilities)× 100/1,calculate the gearing ratio from the following information.Long-term liabilities $18m,Shareholders' funds $14m.

Accepted Answer

A)  128%. 
B)  56%. 
C)  78%. 
D)  44%. 
A)  128%. 
B)  56%. 
C)  78%. 
D)  44%.

Question 4

BBB Ltd has provided information from its financial statements for the year ended 30 June 2015.
$$\begin{array} { l r } 
\text { Sales (all on credit) } & \$ 1,900,000 \
\text { Gross profit on sales } & 900,000 \
\text { Net profit } & 150,000 \
\text { Cost of sales } & 1,000,000 \
\text { Inventory at end of year } & 200,000 \
\text { Accounts receivable at end of year } & 500,000
\end{array}$$
The company trades 365 days per year.
-The number of times BBB's inventory turned over for 2015 is:

Accepted Answer

A)  2.0 times. 
B)  5.0 times. 
C)  5.5 times. 
D)  2.2 times. 
A)  2.0 times. 
B)  5.0 times. 
C)  5.5 times. 
D)  2.2 times.

Question 5

A good benchmark to compare business performance during a given period is:

Accepted Answer

A)  budgeted performance. 
B)  past performance. 
C)  competitor's performance. 
D)  all of the above. 
A)  budgeted performance. 
B)  past performance. 
C)  competitor's performance. 
D)  all of the above.

Question 6

Blue Company reported:
$$\begin{array} { l l } 
\text { Share price } & \$ 18 \
\text { Net profit } & \$ 3,000 \
\text { Preference dividend } & \$ 500 \
\text { Ordinary dividend } & \$ 1,000 \
\text { Issued ordinary shares } & 1,000 \text { shares }
\end{array}$$
-
The price-earnings ratio per ordinary share is:

Accepted Answer

A)  1.8:1. 
B)  7.2:1. 
C)  5.0:1. 
D)  3.0:1. 
A)  1.8:1. 
B)  7.2:1. 
C)  5.0:1. 
D)  3.0:1.

Question 7

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000,how much are the company's current liabilities?

Accepted Answer

A)  $240,000. 
B)  $300,000. 
C)  $360,000. 
D)  $200,000. 
A)  $240,000. 
B)  $300,000. 
C)  $360,000. 
D)  $200,000.

Question 8

Which of these are alternative measures of gearing?

Accepted Answer

A)  Total liabilities/total assets. 
B)  Total liabilities/total owners' equity. 
C)  Long-term liabilities/ total owners' equity. 
D)  All are alternative measures of gearing. 
A)  Total liabilities/total assets. 
B)  Total liabilities/total owners' equity. 
C)  Long-term liabilities/ total owners' equity. 
D)  All are alternative measures of gearing.

Financial solvency refers to the ability of an entity to:

Dividends announced during the period divided by the number of shares on issue is the formula for:

Using the formula,gearing ratio = long-term liabilities/ (shareholders' funds + long-term liabilities)× 100/1,calculate the gearing ratio from the following information.Long-term liabilities $18m,Shareholders' funds $14m.

A good benchmark to compare business performance during a given period is:

Blue Company reported: Share price \ 18 Net profit \ 3,000 Preference dividend \ 500 Ordinary dividend \ 1,000 Issued ordinary shares 1,000 shares - The price-earnings ratio per ordinary share is:

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000,how much are the company's current liabilities?

Which of these are alternative measures of gearing?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 8: Analysis and Interpretation of Financial Statements

Financial solvency refers to the ability of an entity to:

Dividends announced during the period divided by the number of shares on issue is the formula for:

Using the formula,gearing ratio = long-term liabilities/ (shareholders' funds + long-term liabilities)× 100/1,calculate the gearing ratio from the following information.Long-term liabilities $18m,Shareholders' funds $14m.

A good benchmark to compare business performance during a given period is:

Blue Company reported: Share price \ 18 Net profit \ 3,000 Preference dividend \ 500 Ordinary dividend \ 1,000 Issued ordinary shares 1,000 shares - The price-earnings ratio per ordinary share is:

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000,how much are the company's current liabilities?

Which of these are alternative measures of gearing?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters