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finance 2
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finance 2 trial exam
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ABB2FIN2A.1 29-06-2015 9.00h duration 120 minutes1. What causes the profit for the reporting period not to equal the net cash inflow?(6p)
2. What is a contingent liability?(5p)
3. Some businesses(for example supermarket chains) operate on a low operating profit
margin. Does this mean that the return on capital employed from the business will also
be low? Please explain your answer.(5p)
4. Identify and discuss factors that might influence the level of dividend per share a
company decides to pay.(4p)
5. To what purposes can ratios be used.(4p)
6. By using the information given about Westham ltd in the appendix and below compile
a statement of cash flows using the indirect method. (starting with profit).(48p)
Additional information;
During 2014, the business spent 190 million on additional plant and machinery. There
were no other acquisitions or disposals of non-current assets. A dividend of 100
million was paid on ordinary shares during the year. The interest receivable revenue
and the interest payable expense were equal to the year cash inflow and outflow
respectively. €300.000 of loan notes were redeemed at their face (par) value.
7. Using the information given about Westham ltd in the appendix give a ratio analysis
by using one (1) ratio for each of the following aspects.
a. Liquidity (7p)
b. Profitability (7p)
c. Investment (7p)
8. Give an evaluation of the financial situation of the company based on the ratio’s you
calculated. (5p)
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