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

Analysis and communication of accounting information — practice question

For M plc, financial data are given for the year to 30 June 2018, alongside comparative figures for its competitor V plc.
(a)[2]

Calculate the market price of one ordinary share.

(b(i))[3]

Calculate earnings per share, giving your answer to two decimal places.

(b(ii))[3]

Calculate, to two decimal places, the price earnings ratio.

(b(iii))[3]

Calculate, to two decimal places, dividend cover.

(c)[6]

Analyse the performance of both companies using only gross margin, profit margin and return on capital employed.

(d)[9]

Analyse the performance of both companies using the other ratios.

(e)[5]

Advise Pepe on which of the two companies he ought to invest in. Justify your answer.

Worked solution & mark scheme

This 31-mark question has a full step-by-step worked solution and mark scheme. One marking point: Market price is $1.60

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