QUESTION: 101

The following information has been extracted from the financial statements of two single entities, TUV and XYZ, for the year ended 30 September 20X3.
Which of the following options shows the gearing ratios (Debt/Equity) for TUV and XYZ at 30 September 20X3?

Option
Option
Option

Answer(s): A

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QUESTION: 102

CORRECT TEXT
The following information has been extracted from the financial records of DEF for the year ended 31 December 20X2.

What is the operating cycle of DEF at 31 December 20X1? Assume there are 365 days in the year.
All workings should be rounded to whole days.
Give your answer in whole days.

80, 81

Answer(s): A

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QUESTION: 103

Which TWO of the following are true for an entity raising equity finance using a rights issue rather than a placing of equity shares to new investors?

The administration is more complex and therefore likely to be more costly.
The shares will sell at a higher price and therefore generate more funds.
The voting rights of existing shareholders will be unaffected if the shareholders take up their rights.
The cost of underwriting will be lower because the risk of the issue is lower.
The issue will widen the base of shareholders if all shareholders take up their rights.

Answer(s): A,C

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QUESTION: 104

XY has a weighted average cost of capital (WACC) of 12%. The debt:equity ratio is 1:3 and this is considered low for the industry. XY needs to raise finance to purchase new machinery in the coming year.
Which of the following forms of finance is most likely to increase the WACC?

Rights issue of equity shares
6% bank loan
8% preference shares
Finance lease

Answer(s): A

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QUESTION: 101

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QUESTION: 104

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