Investor decision – NBC Institute

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Question

Real Expansion Plc is a large group that seeks to grow by acquisition. The directors have identified two potential entities and obtained copies of their financial statements. The accountant of the company computed key ratios to evaluate the performance of these companies relating to:

Profitability and returns;
Efficiency in the use of assets;
Corporate leverage; and
Investor-based decisions.

The computation generated hot arguments among the directors, and they decided to engage a Consultant to provide expert advice on which company to acquire.

Extracts from these financial statements are given below:

Required:

(a) As the Consultant to the company, carry out a financial analysis on the financial statements and advise the company appropriately. (15 Marks)

(b) State the major limitations of ratio analysis for performance evaluation. (5 Marks)

Answer

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Tags: Efficiency, Financial Ratios, Investor decision, Leverage, Performance Evaluation, Profitability
Level: Level 3

Topic: Emerging Trends in Corporate Reporting

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

Question

Assume a 10% interest on the outstanding loan and 22% Corporate Tax.

Required:
i) Calculate the operating gearing and financial gearing for GGOH. (5 marks)

ii) Assess how these ratios could impact an investor’s decision to invest in GGOH. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate finance, Financial Gearing, Investor decision, Operating Gearing, Ratio Analysis
Level: Level 3

Topic: Financial management
Series: NOV 2020

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Question

Profitability and returns;
Efficiency in the use of assets;
Corporate leverage; and
Investor-based decisions.

The computation generated hot arguments among the directors, and they decided to engage a Consultant to provide expert advice on which company to acquire.

Extracts from these financial statements are given below:

Required:

(a) As the Consultant to the company, carry out a financial analysis on the financial statements and advise the company appropriately. (15 Marks)

(b) State the major limitations of ratio analysis for performance evaluation. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Efficiency, Financial Ratios, Investor decision, Leverage, Performance Evaluation, Profitability
Level: Level 3

Topic: Emerging Trends in Corporate Reporting

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

Question

Assume a 10% interest on the outstanding loan and 22% Corporate Tax.

Required:
i) Calculate the operating gearing and financial gearing for GGOH. (5 marks)

ii) Assess how these ratios could impact an investor’s decision to invest in GGOH. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate finance, Financial Gearing, Investor decision, Operating Gearing, Ratio Analysis
Level: Level 3

Topic: Financial management
Series: NOV 2020

Question Tag: Investor decision

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CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Required:

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Required:

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

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Question Tag: Investor decision

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CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Required:

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SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

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CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Required:

You're reporting an error for "CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting"

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

You're reporting an error for "SCS – Nov 2020 – L3 – Q8 – Financial management"

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