Exam 10: Analysis and Interpretation of Financial Statements

If the earnings yield is 6.67%, the price-earnings ratio is:

Which of these is not a limitation of ratio analysis?

Which of these ratios measure returns to shareholders?

Success Ltd has a price-earnings ratio of 5 and earnings per share of 22 cents. Its issued capital consists of 2 000 000 $1 ordinary shares. The market price per share is:

What does the current ratio measure?

R Co had a profit of $100 000 before tax, after deducting $18 000 in interest expense. R Co's non-current liabilities and equity total $1 000 000. Return on capital employed, before interest and tax is:

What does the acid test ratio eliminate from its calculation, because it is considered the least liquid of the current assets?

What is a good benchmark to compare business performance during a given period?

Which ratio is considered to be the primary measure of overall profitability as it assesses how effectively the business has used its funds?

The following information was extracted from the financial records of Ross Ltd for the year ended 30 June 2018: Cash Sales \ 50,000 Credit Sales 200,000 Accounts receivable 25,000 Cost of Sales 130,000 If there are 365 trading days per year, calculate for the managing director the number of days that accounts receivable are outstanding at 30 June 2018.

If gross profit is $500 000, interest expense is $200 000, sales is $1 900 000 and total assets are $5 400 000, calculate the gross profit margin.

If the price-earnings ratio is 8 times, the earnings yield is:

Because a company's inventory is less liquid than its other current assets when investors are assessing liquidity, they should examine the:

Dividend yield is calculated as:

Brad's Engineering Pty Ltd 2018 2017 Statement of financial positions as at 30 June \ \ Total Current Assets 11080 10280 Total Fixed Assets 75000 42000 TOTAL ASSETS \ 86,080 \ 52,280 Total Current Liabilities 3400 1960 Long-term Liabilities 20000 8500 TOTAL LIABILITIES \2 3,400 \1 0,460 NET ASSETS (Assets - Lizbilities) $\quad$$\quad$ $62,680 $\quad$ $41,820 SHAREHOLDERS' EQUITY Share capital 40,000 30,000 Reserves and retained profits 22,680 11,820 \6 2,680 \4 1,820 Additional Information: 2018 2017 Net profit after interest \& tax \ 10,860 \ 6,000 Interest expense 2000 900 Taxation expense 3000 1500 REQUIRED: a)From the information provided above, calculate each of the following ratios for each of the years ending 30 June 2017 and 2018. Gearing ratio. Use formula $\quad$$\quad$$\frac{\text {Long - term liabilities }}{\text {Share cropital and reserves + long - term lizbilities }}$ Interest cover ratio. Use formula $\quad$$\quad$$\frac{\text {Profit before interest and tax }}{\text {Interest }}$ b)Comment on the movements in the ratios over the two years and the adequacy of the level of gearing and interest cover. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Dividend yield on ordinary shares is calculated as:

Which of these is a limitation of financial ratio analysis?

Which of these is not an advantage of using borrowed funds to finance a business?

If the turnover period for accounts receivable is 8.1 times per annum, what is the average number of days it takes to collect cash from accounts receivable?

Which of the following businesses would you expect to have the highest current ratio?