Tag: Earnings Per Share

Accounting Multiple Choice Question – 28 October 2023

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Alex Trading limited company has the following share capital as at 31 December 2022.

  • ordinary shares of £1 each fully paid – £5M
  • 7.5% preference shares of £ each fully paid – £0.2M

The market price of Alex Trading limited ordinary shares as at 31 December is £1.45.

The company’s statement of changes in equity for the year ended 31 December shows:

  • profit after tax – £470k
  • preference dividend – £15k
  • ordinary dividend – £52k
  • retained profit for the year – £403k

What is the price earnings (P/E) ratio as at 31 December?

Select ONE answer:

  1. 15.4
  2. 15.9
  3. 16.6
  4. 18.0

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 2

  1. Not correct
  2. Correct – P/E ratio = price / EPS (profit divided by the outstanding ordinary shares) == > (£470k – £15k) / 5M shares == > 0.091 EPS == > £1.45 share price / £0.091 = PE Ratio 15.9
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 8 September 2023

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Alex plc annual results are shown below:

  • profit for the year – £215,000
  • preference dividends – £15,000
  • ordinary dividends – interim paid – £25,000
  • ordinary dividends – final approved – £75,000
  • retained profit for the year – £100,000

The final ordinary dividend has been approved by the shareholders, but for financial reasons will only be paid after one year.

What are the ‘earnings’ to be included in the earnings per share calculation?

Select ONE answer:

  1. 100,000
  2. 175,000
  3. 200,000
  4. 215,000

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: £215k – £15k
  4. Not correct

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This work is licensed under a Creative Commons Attribution 4.0 International License.

Accounting Multiple Choice Question – 4 September 2023

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Olya Kobruseva on Pexels.com

Alex plc makes annual profits of £30M before paying interest of £6M and ordinary dividends of £10M.

It has in issue 20M shares of £0.50 each, currently valued on the Stafford stock exchange at £15 each.

What is the company’s price-earnings ratio?

Select ONE answer:

  1. 8.3
  2. 10.0
  3. 12.5
  4. 21.4

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 – market value per share / EPS (Profit after Interest before tax / Issued Shares) == > £15 / (£30M – £6M / 20M) = 12.5
  4. Not correct

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.