198 Paper F7 Answers to Examples September/December 2016 Appendix 2009 2008 115 76 Return on capital employed 0.75% 0.48% 16,248 16,008 115 76 Profit margin 9.4% 7.6% 1,220 1,000 1,220 1,000 Asset turnover 0.075% 0.062% 16,248 16,008 64 54 Return on equity 0.40% 0.34% 16,048 16,008 Current ratio 520 : 872 .6 : 1 310 : 202 1.5 : 1 Quick ratio 295 : 872 .3 : 1 190 : 202 .95 : 1 900 760 Inventory turnover 4 × 6.3 × 225 120 280 × 365 125 × 365 Receivables days 83.7 days 46 days 1,220 1,000 440 × 365 160 × 365 Payables days 176 days 80 days 900 760 200 Debt / equity 1.25% N/A 16,048 115 Interest cover 4.87 × N/A 24 64 54 Dividend cover 2.7 2.7 24 20 Chapter 21 answEr ExamplE 1 to Rights fraction Shares Value In vestment Before 4 4 16 Rights 1 3 3 After 5 19 After the rights issue, an existing investor has an investment of 5 shares worth $19 ie $3.80 per share. CRAP 4.00 The rights fraction is therefore ie TERP 3.80 Do not reduce this to a decimal calculation. A degree of accuracy is unnecessarily lost. Basic EPS calculation Date Number Fraction WANES 1.1.09 5,000,000 7/12 4/3.8 1.8.09 6,250,000 5/12 3,000,000 EPS = 52.9c 5,674,341 2008 as originally disclosed 54c 54 ×3.8 as restated = 51.3c 4
198 Paper F7 Answers to Examples September/December 2016 Appendix 2009 2008 Return on capital employed 115 0.75% 76 0.48% 16,248 16,008 Profit margin 115 9.4% 76 7.6% 1,220 1,000 Asset turnover 1,220 0.075% 1,000 0.062% 16,248 16,008 Return on equity 64 0.40% 54 0.34% 16,048 16,008 Current ratio 520 : 872 .6 : 1 310 : 202 1.5 : 1 Quick ratio 295 : 872 .3 : 1 190 : 202 .95 : 1 Inventory turnover 900 4 × 760 6.3 × 225 120 Receivables days 280 × 365 83.7 days 125 × 365 46 days 1,220 1,000 Payables days 440 × 365 176 days 160 × 365 80 days 900 760 Debt / equity 200 1.25% N/A 16,048 Interest cover 115 4.87 × N/A 24 Dividend cover 64 2.7 54 2.7 24 20 Chapter 21 answEr to ExamplE 1 Rights fraction Shares Value In vestment Before 4 4 16 Rights 1 3 3 After 5 19 After the rights issue, an existing investor has an investment of 5 shares worth $19 ie $3.80 per share. The rights fraction is therefore CRAP ie 4.00 TERP 3.80 Do not reduce this to a decimal calculation. A degree of accuracy is unnecessarily lost. Basic EPS calculation Date Number Fraction WANES 1.1.09 5,000,000 7/12 4/3.8 1.8.09 6,250,000 5/12 EPS 3,000,000 = 52.9c 5,674,341 2008 as originally disclosed 54c as restated 54 ×3.8 = 51.3c 4
ACCA_F7_S16_Notes.docx