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1. Last year ABC Co made profits before tax of $2,720,000. Tax amounted to $760,000.
ABC Co’s share capital was $2,000,000 (2,000,000 shares of $1) and $4,000,000 6% preference shares.
What was the earnings per share (EPS) for the year (insert your answer to two decimal places)?
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2. Which of the following statements describes the main objective of financial management?
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3. Indicate, by clicking in the relevant boxes, whether the following objectives are financial or non-financial objectives of a company.
A. Maximisation of market share
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B. Earnings growth
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C. Sales revenue growth
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D. Achieving a target level of customer satisfaction
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E. Achieving a target level of return on capital employed
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4. A company has recently declared a dividend of 12c per share. The share price is $3.72 cum div and earnings for the most recent year were 60c per share. What is the P/E ratio?
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5. The following information relates to a company:
Year                                                0         1         2         3
Earnings per share (cents) Â Â Â Â Â Â Â Â Â Â 30.0Â Â Â Â 31.8Â Â Â 33.9 Â Â Â 35.7
Dividends per share (cents)Â Â Â Â Â Â Â Â 13.0Â Â Â Â 13.2 Â Â Â 13.3 Â Â Â 15.0
Share price at start of year ($) Â Â Â Â 1.95 Â Â Â Â Â 1.98 Â Â Â 2.01 Â Â Â 2.25
Which of the following statements is correct?
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6. Which of the following is LEAST likely to fall within financial management?
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7. Which of the following tasks would typically be carried out by a member of the financial management team?
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8. Which of the following is an example of an internal stakeholder in a firm?
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9. What is the main purpose of corporate governance?
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10. Which of the following does NOT form part of the objectives of a corporate governance best practice framework?
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11. Are the following statements true or false?
A. Financial objectives should be quantitative so that their achievement can be measured.
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B. Maximising market share is an example of a financial objective.
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C. Shareholder wealth maximisation is the primary financial objective for a company listed on a stock exchange.
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12. Which THREE of the following are characteristics of a carefully designed remuneration package?
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13. Which of the following would you expect to be the responsibility of financial management?
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14. Indicate, by clicking in the relevant boxes below, whether the following statements are true or false?
A. Value for money is usually taken to mean economy, efficiency and engagement
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B. Cum dividend means the buyer of the share is entitled to receive the dividend shortly to be paid.
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C. The dividend payout ratio compares the dividend per share with the market price per share
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D. The agency problem means that shareholder wealth is not being maximised
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15. ARP is a charity providing transport for people visiting hospitals. Which of the following performance measures would BEST fit with efficiency in a value for money review?
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16. A government body uses measures based upon the ‘three Es’ to measure value for money generated by a publicly funded hospital. Which of the following relates to efficiency?
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17. Which of the following statements is NOT correct?
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18. Geeh Co paid an interim dividend of $0.06 per ordinary share on 31 October 20X6 and declared a final dividend of $0.08 on 31 December 20X The ordinary shares in Geeh Co are trading at a cum-div price of $1.83.
What is the dividend yield (to one decimal place)?
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19. Increasing which TWO of the following would be associated with the financial objective of shareholder wealth maximisation?
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20. The directors of Portico plc have recently engaged a firm of consultants to negotiate standard terms of trade for one of its strategic business units. This includes the agreement by Portico plc to pay a 5% penalty on any late invoice settlement. This policy is an illustration of the company’s concern for which major stakeholder?
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The following scenario relates to questions 21–25.
Summary financial information for JAY Co is given below, covering the last two years.
21. What is the total shareholder return?
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22. What is the percentage increase in return on capital (ROCE) for JAY Co between 20X7 and 20X8 (to one decimal place)?
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23. Accounting profits may not be the best measure of a company’s performance. Which of the following statements support this theory?
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24. What is the operating profit margin for 20X8 (to one decimal place)?
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25. As well as the information above, the following extra data is available:
20X8 Â Â Â Â Â Â Â Â Â Â Â Â Â 20X7
Gearing (debt/equity) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 35.1% Â Â Â Â Â Â Â Â Â Â Â 49.9%
Interest cover (PBIT/interest) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 9.5Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 7.2
Inflation                                                    3%                  3%
Based on all of the information available, are the following statements true or false?