Chapter 8 Self-test questions

Ratio analysis 1: profitability, ef ficiency, and performance
. Which one of the following is an efficiency ratio?

. Which of the following factors will explain the rise in the gross profit % of a haulage business? Please select all that apply.

. _________________ percentage determines profitability on the basis of revenue less all operating costs, before taking into account the effects of finance income, finance expense and taxation.

. An increase in the gross profit figure means that an organisation is more profitable than in the preceding financial year.

. Match the description to each of the four performance ratios.

Earnings per share

.

Dividend cover

.

Dividend per share

.

Dividend yield

. Moira Limited's statement of profit or loss for the financial year shows revenue of £850,000, cost of sales of £525,000, selling and distribution costs of £82,000, administration expenses of £105,000, finance expense of 6,000 and taxation on the profit for the year of £33,000. What is Moira Limited's profit before tax % for the year?

. Which of the following statements describe the advantages of ratios? Please select all that apply.

. ____________ ratio = market price divided by EPS.

. Ratios provide the final answer.

. Moira Limited has profit after tax of £99,000 for the year ended 30 September 2021. The company has share capital of £400,000 made up of 600,000 ordinary shares with a par value of 50 pence each and 100,000 preference shares with a par value of £1. The preference shares carry a dividend rate of 9%. What is Moira Limited's earnings per share for the year ended 30 September 2021?

. Katya plc's profit after tax for the year ended 30 November 2021 was £20,000,000. Total dividends paid during the year to 30 November 2021 were £10,000,000. Total dividends paid include the preference dividend for the year. The company has share capital of £100,000,000 made up of £80,000,000 of ordinary share capital with a par value of 80 pence each and 20,000,000 preference shares with a par value of £1 each. The preference shares carry a dividend rate of 10%. What is Katya plc's dividend per ordinary share for the year ended 30 November 2021?

. Tarik Limited has 500,000 ordinary shares of 50 pence each and £250,000 of 8% preference shares with a par value of £1. During the financial year ended 30 June 2021, total ordinary and preference dividends paid were £100,000. Profit before tax for the year was £500,000 and taxation was charged on this figure at the rate of 20%. What is Tarik Limited's dividend cover for the year to 30 June 2021?

. If revenue for the year is £2,500,000 and the non-current asset turnover is 2 times, then the non-current assets figure is £5,000,000.

. Salome plc's dividend yield for the financial year ended 31 March 2021 is 3%. Salome plc's share capital consists of £10,000,000 made up of 40,000,000 ordinary shares with a par value of 20 pence each and 4,000,000 4% preference shares with a par value of 50 pence each. The current market price of ordinary shares in Salome plc is 240 pence. What are the total dividends (both preference and ordinary) paid by Salome plc in the financial year ended 31 March 2021?

. In the financial year ended 31 July 2021 Rajdeep plc reported a profit before tax of £2,500,000. Tax on Rajdeep plc's profits is charged at the rate of 20% on profit before tax. Rajdeep plc's share capital of £5,000,000 is made up of ordinary shares of 25 pence each. The current market price of one share in Rajdeep Limited is 200 pence. What is Rajdeep plc's price earnings ratio?

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