F9: PROGRESS TEST 1

A company has the following statement of profit or loss and statement of financial position extracts:
$ $
PBIT 500,000 Non-current assets 5,000,000
Interest (50,000)
PBT 450,000 Current assets 2,500,000
Tax (50%) (225,000)
225,000 Less:
Current liabilities (1,500,000)
Preference dividend (25,000)
Ordinary dividend (100,000) Net assets 6,000,000
Dividend retained 100,000

1 The ROCE is:

A 10%
B 7.5%
C 8.3%
D 3.75% (2 marks)
2 Dividend cover is:
A 1.8
B 2
C 1.0
D 1.4 (2 marks)
3 Interest cover(age) is:
A 9.0
B 4.5
C 10.0
D 2.0 (2 marks)
F9: PROGRESS TEST 1

4 Extracts of financial details of a company are as follows:

$
Sales 500,000
Cost of sales 420,000
Purchases 280,000
Receivables 62,500
Payables 42,000
Inventory 185,000

The operating cycle to the nearest whole day is:

A 190 days
B 140 days
C 152 days
D Cannot be calculated (4 marks)
5 Using the data from Question 4, the sales to net working capital ratio is:
A 2.43
B 8.00
C 1.46
D Cannot be calculated (2 marks)
6 Using the data from Questions 4 and 5 the increase in cash required to support a sales
increase of 30%, to the nearest $'000 is:
A $6
B $215
C $62
D $65 (2 marks)
7 You are given the following details:
Share capital 500,000 5c shares
Statement of profit or
loss
$
Profit before tax 400,000
Tax (100,000)
Earnings 300,000
Dividends (100,000)
Retained 200,000
The EPS is:
A 80c
B 40c
C 60c
D 30c (2 marks)
 F9: PROGRESS TEST 1

8 A company faces demand of 500 units per month for imported ipods that it purchases for
$50 per unit. The cost of an order is $100 and holding costs are 10% pa of inventory value.
The economic order quantity (to the nearest unit) is:
A 100
B 490
C 333
D 1,000 (2 marks)
9 A company with annual sales of $960,000 and average receivables of two months, is
considering offering a 2% prompt payment discount. They estimate that half of their
customers will take up this discount and that this will have the effect of reducing average
receivables to one month. This company currently has a bank overdraft which costs 15% pa.
The net benefit / (cost) of this change will be:
A ($7,200) cost
B $70,400 benefit
C ($22,400) cost
D $2,400 benefit (2 marks)
10 Bonds that are issued by a company at a large discount to their eventual redemption value,
but on which no interest is paid until redemption, are called:
A Loan notes
B Zero coupon bonds
C Equity bonds
D Floating rate bonds (2 marks)

1 Compare the objectives of a listed company with those of a not for profit organisation
(6 marks)
2 Identify the three key elements of a financial strategy (3 marks)
3 Discuss the impact of a devaluation of the pound on a UK firm exporting to the USA
(3 marks)
4 Describe the functions of a financial intermediary (3 marks)