Accounting Multiple Choice Question – 12 July 2023

Alex plc’s authorised share capital is 1 million ordinary shares of £1 each.

800,000 shares have been issued and have a market value of £2.50 each.

Year end results show the following:

• profits before interest and taxation – £100k
• profits after interest and taxation – £80k
• profits after interest, taxation and ordinary dividends – £50k

What is the price-earnings ratio?

Select ONE answer:

1. 10
2. 20
3. 25
4. 40

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

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

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

The answer is 3

1. Not correct
2. Not correct
3. Correct- £2.50 / (£80,000 / 800,000) ==> 25
4. Not correct

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