TC plc provided the following information Ordinary shares in issue Annual dividend at its year end....

  

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TC plc provided the following information Ordinary shares in issue Annual dividend at its year end. 1 million at $0.50 each $80000 $215000 Profit from operations Profit for the year Market value of one share $195 000 $0.75 (a) Explain why the use of ratios may be helpful in analysing accounting data. (b) (i) Calculate, to two decimal places, TC plc's income gearing ratio. (ii) State what this ratio tells an investor about the risk of the company. (iii) Name one other ratio which assesses the relationship between fixed cost capital and total capital. (c) (i) Calculate, to two decimal places, TC plc's dividend cover. (ii) State what this ratio tells an investor about the company's potential for capital growth. (d) (i) Calculate, to two decimal places, TC plc's dividend yield. (ii) State what this ratio tells an investor in the company who needs income. (e) Name and calculate the ratio which shows the amount of profit attributable to each ordinary share. (f) Name and calculate, to two decimal places, the ratio which measures the confidence investors have in the future of the business. Additional information Fred is considering investing in TC plc. His brother says that in order to make a decision, Fred does not need to look at the income statement and statement of financial position, but only needs to look at the directors' report. (g) Advise Fred whether or not he should follow his brother's advice. Justify your answer. TC plc provided the following information Ordinary shares in issue Annual dividend at its year end. 1 million at $0.50 each $80000 $215000 Profit from operations Profit for the year Market value of one share $195 000 $0.75 (a) Explain why the use of ratios may be helpful in analysing accounting data. (b) (i) Calculate, to two decimal places, TC plc's income gearing ratio. (ii) State what this ratio tells an investor about the risk of the company. (iii) Name one other ratio which assesses the relationship between fixed cost capital and total capital. (c) (i) Calculate, to two decimal places, TC plc's dividend cover. (ii) State what this ratio tells an investor about the company's potential for capital growth. (d) (i) Calculate, to two decimal places, TC plc's dividend yield. (ii) State what this ratio tells an investor in the company who needs income. (e) Name and calculate the ratio which shows the amount of profit attributable to each ordinary share. (f) Name and calculate, to two decimal places, the ratio which measures the confidence investors have in the future of the business. Additional information Fred is considering investing in TC plc. His brother says that in order to make a decision, Fred does not need to look at the income statement and statement of financial position, but only needs to look at the directors' report. (g) Advise Fred whether or not he should follow his brother's advice. Justify your answer.

Answer rating: 100% (QA)

a Ratios can be helpful in analyzing accounting data because they can provide information about a companys financial health performance and risk b i T... View the full answer