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Week5 Tutorial

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7 views

Week5 Tutorial

Uploaded by

jennifertranlinhchi
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Week 5: Tutorial (FSDM I)

1. ABC has a market capitalization of $5,000,000 with 2,000,000 50p


ordinary shares in issue. What is the current share price of the company?

2. ABC has a market capitalization of $5,000,000 with 2,000,000 50p


ordinary shares in issue. Consider the company’s income statement:
Income statement $000
Profit before tax 1,170
Tax 120
Profit for the year 1,050
What are the earnings per share?

3. In addition to the information provided in question 2, the company paid a


dividend of $150,000 during the year. What is the company’s P/E ratio?

4. What are the main types of financial ratios and what are their primary
uses? Please give examples of each type of financial ratio.

5. What is meant by capital investment, cost of capital, net present value,


internal rate of return, and capital rationing?

6. Which one of the following ratios is used to assess the relative success
or failure of business performance?
(A) Performance ratios (B) Liquidity ratios
(C) Efficiency ratios (D) Lending ratios

7. Which one of the following ratios is used to assess the extent to which
items of assets and liability are well-utilized and well-managed?
(A) Performance ratios (B) Liquidity ratios
(C) Efficiency ratios (D) Lending ratios
8. Which one of the following ratios is used to assess the extent to which a
business can comfortably cover its liabilities?
(A) Performance ratios (B) Liquidity ratios
(C) Efficiency ratios (D) Lending ratios

9. Consider the following information (in millions) regarding ABC:


Variable 2024 2023
Current assets 284 280
Current liabilities 97 120
Inventory 104 140
What is the quick ratio?

10. What is the non-current asset turnover if:


Variable 2024 (in millions) 2023 (in millions)
Sales 1600 1400
Fixed assets 1826 1800

11. In an investment scheme, if you pay $10,000 at time 0, you receive $5,000
after one year and $ 7,000 after two years. Is this a good investment if the
interest rate is 20%?

12. What is the total cost of a new machine when the company must make
five lease payments of $8,000 each year starting now. The company’s
cost of capital is currently 10%, which serves as a benchmark for
assessing the financing options. Suppose the corporate tax rate is 30%.

13. What is the total cost of a new machine when the company must make
lease payments of $9,000 at the end of each of the next six years. The
company’s cost of capital is currently 10%, which serves as a benchmark
for assessing the financing options. Suppose the corporate tax rate is
30% per annum.

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