Chapter 13 - Understanding financial reports: Using accounting ratios

Multiple-choice exercise

Choose the correct answer for each question.




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Information needed to complete the quiz


Chapter 13




Question 1 & 2


Prakash and Pizzey Limited have the following relevantinformation in their
financial statements drawn up to 31 May 20X4:


 
£
Gross profit
984 217
Various expenses
557 032
Operating profit
427 185
Interest payable
93 700
Profit before taxation
333 485
Taxation
94 440
Profit after taxation
239 045
Dividends
150 000
Profit for the financial year
89 045
 

Extracts from the balance sheet:


Share capital (£1 shares)
200 000
Reserves
1 825 450
Loan capital
1 300 000


Question 4


Parmar Wallace Limited has the following working capitalitems in its balance
sheet at 31 March 20X5:


 
£
£
Stock
259 270
Debtors
224 750
Less: provisions
(8 620)
 
216 130
Cash at bank
17 526
Trade creditors
298 442

The company belongs to a trade association which has recently published industry
averages for key financial ratios based upon asurvey of its members. The industry
averages for current and quick ratios are:


Current ratio 1.82:1
Quick ratio 0.93:1


Question 5


Ptarmigan Poleaxe Limited has the following details relating to its fixed assets
in its balance sheet at 31 August 20X3:


 
£
£
£
Land
65 000
-
65 000
Buildings
100 000
12 000
88 000
Plant and machinery
176 700
53 500
123 200

The company made sales of £424 600 less returns of £13 259in the
year.




Question 7


Porter Plymouth Limited has the following informationrelevant to debtors and
sales in its balance sheet at 31 December 20X5:


 
£
Sales (75% of which are on credit)
1 670 227
 
Debtors
165 923
Less: provisions for doubtful debts
(18 552)
 
147 371





Questions 8 & 9


Plinlimmon Pleasance plc is a quoted company. Extracts fromits financial statements
for the year ending 28 February 20X2 include thefollowing:


 
£000
Turnover
22 840
Operating profit
6 149
Interest payable
(1 437)
Profit before taxation
4 712
Taxation
(1 500)
Profit after taxation
3 312
Dividends
(860)
Retained profit
2 452

The company has 5 000 000 25p ordinary shares in issue. At28 February 20X2
the market price of one share was £3.83.


 


Question 10


At 31 May 20X6 Palethorpe and Swizzell plc has a marketcapitalisation of £13
950 000 with 5 000 000 50p ordinary shares in issue.


Extracts from the company’s profit and loss account at thatdate show:


 
£000
Operating profit
2 256
Interest payable
(600)
Profit before taxation
1 656
Taxation
(536)
Profit after taxation
1 120
Dividends
(500)
Retained profit
620