Accounting 9706 · AS & A Level · Analysis and communication of accounting information

Analysis and communication of accounting information — practice question

James has only just retired and wants to place cash in either LM plc or AB plc.
(a(i))[4]

Calculate the earnings per share for both companies from the data given.

(a(ii))[4]

Calculate the price earnings ratio for both companies using the figures provided.

(a(iii))[4]

Calculate the dividend yield for both companies from the given data.

(a(iv))[4]

Calculate the dividend cover for both companies from the information given.

(b)[8]

Evaluate how each company performs by using every ratio you calculated in part (a).

(c(i))[2]

Explain what you understand by gearing in this context.

(c(ii))[2]

Calculate the gearing ratio for both companies, giving your answer to two decimal places.

(c(iii))[5]

Analyse how the gearing ratios of LM plc and AB plc compare.

(d)[4]

Advise James which company he should invest in, giving reasons for your answer.

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