Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
22 Cards in this Set
- Front
- Back
|
Is the statement below true or false? 'Retail markets trade in large quantities' |
False. (Retail markets trade in small quantities, wholesale markets trade in large quantities.) |
|
|
DEF Inc. has increased its volumes of production and sales. The selling price per unit has not changed. Which of the following statements is the most accurate? a) revenues will increase b) revenues will decrease c) there is not enough information to know the effect on revenues |
a) revenue will increase. (DEF Inc.'s revenues will increase, because total revenues = volume sold x unit selling price. Volumes sold will increase while the unit selling price is unchanged.) |
|
|
JKL Inc. has increased its volumes of production and sales. The selling price per unit is unchanged. Which of the following statements is the most accurate? a) profits will increase b) profits will decrease c) there is not enough information to know the effect on profits |
There is not enough information to know the effect on profits. (information about JKL Inc.'s total cost is missing) |
|
|
Name two requirements of EMIR which apply to all corporate treasuries which deal in derivative instruments. |
Any two from: 1. report all derivatives trading in detail 2. follow strict procedures for recording all derivatives trades 3. follow strict reconciliation procedures |
|
|
Mercia is a fictious country. Its exports are consistently greater than its imports. Which is most accurate: a) trade deficit and home currency would normally be expected to weaken b) trade surplus and home currency would normally be expected to weaken c) trade deficit and home currency ... strengthen d) trade surplus and home currency ... strengthen |
d) Trade surplus and home currency would normally be expected to strengthen |
|
|
CAB charges the market price of USD 95 per barrel of oil. How much revenue will CAB make if it sells 10m barrels of oil? |
USD 95 x 10m (barrels of oil) = USD 950m |
|
|
Calculate CAB's profit, by comparing its total costs of USD 800m with its revenues of USD 950m. |
USD 950m - USD 800m = USD 150m |
|
|
CAB is an oil company and wants to increase its profits. It is considering producing an extra 1 million barrels. Additional revenues of USD 95m would be received and total additional costs would be USD 100m. Would it be in CAB's interest to go ahead with extra production? |
USD 95m - USD 100m = USD (-5m). Loss is made, they shouldn't go ahead with extra production. |
|
|
New source of oil found: marginal cost would be USD 100 per barrel. At the time of finding this new oil source the current price of oil was USD 95 per barrel. Later, market price rises to USD 110 per barrel and marginal costs have remained at USD 100 per barrel. a) justify company's decision to increase oil production from this new source. b) what will happen to the total supply of oil in the market? |
a) USD 110/barrel (revenue) - USD 100/barrel (marginal/additional cost) = USD 10/barrel (additional profit/barrel) b) the supply of oil in the market will increase as a result of the company's increased production |
|
|
STU plc's statement of financial position contains the following information: Total assets GBP 600m Total liabilities GBP 250m Which statement is most accurate? a) equity is GBP 250m b) equity is GBP 350m c) equity is GBP 600m d) equity is GBP 800m e) there isn't enough information to work out equity |
b) equity is GBP 350m (600-250=350) |
|
|
Is the statement below true or false? FAS are international accounting standards |
False. FAS are US Financial Accounting Standards, IFRS are International Financial Reporting Standards |
|
|
XYZ Inc. has a large external borrowing. As part of borrowing documentation, XYZ has covenant to maintain its interest cover ration above 3 times. As a result of a misunderstanding in the treasury department, XYZ is in breach of covenant. Which statement describes XYZ's position? a) lender will normally be entitled to demand immediate relayment of entire borrowing b) XYZ's earnings per share are likely to improve c) XYZ's revenue is likely to increase d) there is not enough information to say anything about XYZ's new position |
a) The lender will normally be entitled to demand immediate repayment of the entire borrowing. |
|
|
Define legislation |
Legislation is the law created by a central law-making body or a body with delegated authority. |
|
|
Name three matters regulated by company law |
Any three from: 1) how a company is formed 2) its structure and governance 3) accounting and reporting 4) auditing 5) directors' duties |
|
|
Define arm's-length prices |
Prices which would be charged between two unrelated parties. |
|
|
Name two things which are needed for the successful management of tax compliance costs. |
Any two from: 1) simple corporate structure 2) excellent planning 3) excellent record-keeping 4) a clear tax strategy without overly aggressive structures |
|
|
Given that corporation tax rate is 20 percent and Zed's Corner Shop's taxable profits for the year are EUR 110m, calculate the corporation tax charge for the shop |
EUR 100m x 20% = EUR 20m (taxable profits x corporation tax rate = corporation tax charge) |
|
|
PQRQ plc has an operating profit of GBP 150m that allows for the repayment of the GBP 30m finance costs. Given these figures, what is the interest cover? |
GBP 150m ÷ GBP 30m = 5 times (Operating profit ÷ finance cost = interest cover ratio) |
|
|
EPS is earnings per share (dividing earnings by the number of shares) Rocky has 100m shares ad the profit after tax (also called earnings) is USD 96m for the year in question. Caculate EPS. |
USD 96m ÷ 100m = USD 0.96 earnings per share |
|
|
PQLQ plc's assets are GBP 478m and liabilities are GBP 314m. Demonstrate how equity is worked out |
GBP 478m (assets) - GBP 314m (liabilities) = GBP 164m (equity) |
|
|
Operating profit margin is an assessment of a business's profitability. This is the ratio of operating profit ÷ reveue, as a percentage If PQRQ plc's operating profit = GBP 96m and revenue = GBP 950m, show calculations for operating profit margin |
(96 ÷ 950) x 10p = 10.1% = operating profit margin |
|
|
RQPQ plc's revenue = GBP 950m (figure before costs and taxes are substracted). Operating profit or loss is = revenue - operating costs (GBP 800m). Finance cost = GBP 30m. Tax bill = GBP 24m. Calculate: a) operating profit (or loss) b) profit before taxation c) profit after tax |
a) GBP 950m - GBP 800m = GBP 150m b) GBP 150m - GBP 30m = GBP 120m c) GBP 120m - GBP 24m = GBP 96m (which mean it's a profit not a loss) |
