Question 1

A firm has total assets of $800,000 and total liabilities of $300,000. Earnings before interest and taxes are $100,000. Interest is $21,000 and taxes are $34,000. The return on shareholders' funds is:

Accepted Answer

A)  9.0%. 
B)  8.0%. 
C)  12.5%. 
D)  3.8%.

Question 2

Dividend yield on ordinary shares is calculated as:

Accepted Answer

A)  dividends per share divided by market price per share. 
B)  annual dividend divided by earnings. 
C)  annual dividend divided by issued capital. 
D)  none of the above.

Question 3

Which of these are alternative measures of gearing?

Accepted Answer

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

Exam 6: Analysis and Interpretation of Financial Statements

A firm has total assets of $800,000 and total liabilities of $300,000. Earnings before interest and taxes are $100,000. Interest is $21,000 and taxes are $34,000. The return on shareholders' funds is:

Dividend yield on ordinary shares is calculated as:

Which of these are alternative measures of gearing?