Tag: Investor Ratios

Accounting Multiple Choice Question – 8 December 2023

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

Photo by Pixabay on Pexels.com

Alex plc has an issued ordinary share capital of 240,000 ordinary shares of £0.50 each.

The company pays a total ordinary share dividend of £9,600.

The current market price of an ordinary share is £3.20.

What is the current dividend yield?

Select ONE answer:

  1. 1.25%
  2. 2%
  3. 4%
  4. 8%

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 1

  1. Correct – DY = Dividend per Share / Price per share – (9,600 / 240,000) / £3.20 = 1.25%
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 31 October 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 Trading plc has 500,000 ordinary shares in issue and the following reserves.

  • share premium – £20,000
  • revaluation reserve – £50,000
  • general reserve – £80,000
  • retained earnings – £40,000

What is the maximum dividend per share?

Select ONE answer:

  1. £0.08
  2. £0.24
  3. £0.34
  4. £0.38

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 – £80k + £40k / 500k
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 30 October 2023

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

Photo by Pixabay on Pexels.com

The issued share capital of Alex Trading plc is as follows:

  • 400,000 4 % preference shares of £1.00 each fully paid
  • 1,600,000 ordinary shares of £0.50 each fully paid
  • The company’s profit for the year after interest and tax is £128,000

An appropriate dividend cover for the ordinary share is 2.0 times.

What will be the dividend per ordinary share?

Select ONE answer:

  1. £0.035
  2. £0.040
  3. £0.070
  4. £0.080

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 1

  1. Correct = £128,000 – (£0.4M * 0.04) = £112k / 2 = £56k / 1,600 k shares = £0.035
  2. Not correct
  3. Not correct
  4. Not correct

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

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.

Photo by Olya Kobruseva on Pexels.com

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

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

Accounting Multiple Choice Question – 14 July 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 ltd is a company that has the following capital structure:

  • £1 ordinary shares – £500k
  • Share premium account – £300k
  • Retained Earnings – £200k
  • Total Capital & Reserves- £1M

The following transactions will take place during the year in the following order:

  • a bonus issue of 1 share for every 5 held;
  • a rights issue of 500 000 shares of £1 each at a premium of £0.50;
  • an issue of debentures of £250,000.

What will be the total of the share capital and reserves of Alex Ltd after the completion of these transactions?

Select ONE answer:

  1. £1.5M
  2. £1.75M
  3. £1.85M
  4. £2M

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– 1. Dr SPA £100k Cr OS £100k = TCR Still £1M; 2. Dr Cash £750k Cr SPA £250k OS £500k = TCR now £1.75M; 3. Dr Cash £250k Cr NCL £250k = TCE is £2M but TCR is still £1.75M
  3. Not correct
  4. Not correct

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