Accounting Multiple Choice Question – 3 May 2018

Wood Sparrow Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:

• Long-Term Assets £0.8M
• Inventory £0.7M
• Accounts Receivables £0.7M
• Bank Account £0.4M
• Cash £0.1M
• Accounts Payable £0.9M
• Long-term Bank Loan £2M
• Reserves  £0.5M
• Share Capital £0.5M
• Revenue  £10.8M
• Cost-of-Sales  £9M
• Net Profit Margin  £1M
• Purchases  £5.1M

What is Wood Sparrow’s Capital Gearing percentage ratio?

Select ONE answer:

1. 69.66
2. 68.00
3. 67.66
4. 67.00
5. 66.66

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 5 – £2M / (£2M + £0.5M + £0.5M) * 100 = 66.66%

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