Deck 5: Ratio Analysis 1: Profitability, Eef ficiency, and Performance, and the Financing of Business

Question 1

For the financial year ended 30 November 2021, Pedro Limited reports revenue of £1,000,000, operating profit of £350,000, finance income of £15,000, finance expense of £50,000 and a taxation charge of £63,000. What is Pedro Limited's profit before tax % for the financial year ended 30 November 2021?

A) 22.20%
B) 25.20%
C) 28.50%
D) 31.50%

Answer 1

31.50%

Question 2

In the financial statements for the year ended 30 September 2021 Ines Limited reports revenue of £600,000, cost of sales of £270,000, administration expenses of £80,000, finance income of £12,000, finance expense of £24,000 and selling and distribution costs of £76,000. What is Ines Limited's profit before tax % for the financial year ended 30 September 2021?

A) 23%
B) 27%
C) 29%
D) 55%

Answer 2

27%

Question 3

Jorge Limited has current assets of £4.5m and non-current assets of £12.5m. In the year ended 31 December 2021, Jorge Limited generated revenue of £25.5m. What is Jorge Limited's non-current asset turnover?

A) £0.49
B) £1.50
C) £2.04
D) £5.67

Answer 3

£2.04

Question 4

Tammy Plc has made a rights issue of 2 million new ordinary shares for cash. Each ordinary share of the company has a par value of 50 pence. The current share price is 450 pence and the rights issue price is 320 pence. What is the correct double entry required to record this transaction in the company's books of account?

A) Debit cash £1,000,000
Credit share capital £1,000,000
B) Debit cash £6,400,000
Credit share capital £1,000,000
Credit share premium £5,400,000
C) Debit cash £7,400,000
Credit share capital £1,000,000
Credit share premium £6,400,000
D) Debit cash £9,000,000

Question 5

Frannie Plc has made a rights issue of 5 million new ordinary shares to raise cash. Each ordinary share of the company has a par value of 20 pence and the shares were issued at a premium of 280 pence. The current share price is 500 pence. What is the correct double entry required to record this transaction in the company's books of account?

A) Debit cash £14,000,000
Credit share premium £14,000,000
B) Debit cash £14,000,000
Credit share capital £1,000,000
Credit share premium £13,000,000
C) Debit cash £15,000,000
Credit share capital £1,000,000
Credit share premium £14,000,000
D) Debit cash £25,000,000

Question 6

Debit retained earnings, credit share capital, credit share premium account is the correct double entry to record an issue of bonus shares.

Question 7

Dither Limited has an issued share capital of £1,450,000. Share capital consists of 800,000 preference shares of 50 pence each and £1,050,000 of ordinary share capital made up of 25 pence shares. During the financial year ended 30 November 2021, Dither Limited paid total dividends of £335,000. 7.50 pence dividend per ordinary share was paid during the year. What is the dividend rate on the preference shares?

A) 2.50%
B) 5.00%
C) 6.70%
D) 30.00%

Question 8

Debit retained earnings, credit share capital, credit share premium account is the correct double entry to record a rights issue of shares.