# M2 oaes corrections | Business & Finance homework help

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Q6-3: A business has the following balances in its financial records: Income tax £30,000; Selling & administration expenses £80,000; Revenue £350,000; Interest expenses £15,000; Cost of Sales £190,000. Which of the following is correct?

Question options:

Gross profit   £160,000; Operating profit £80,000; Net profit after tax £35,000

Gross profit   £80,000; Operating profit £65,000; Net profit after tax £35,000

Gross profit   £80,000; Operating profit £65,000; Net profit after tax £35,000

Q6-6: ABC buys a smaller company XYZ for a negotiated price of £1 million. XYZ’s assets are valued at £750,000. Assuming goodwill is amortized over 5 years, the value of goodwill in ABC’s Statement of Financial Position at the end of the third year after acquisition will be:

Question options:

£100,000

£150,000

£400,000

Q7-1: The difference between ROI and ROCE ratios is due to:

Question options:

Interest, tax   and long-term debt

Tax and   shareholders’ funds

Long-term debt and shareholders’ funds

Interest and   long-term debt

Q7-2: Use the following information extracted from ABC’s Income Statement and Balance sheet and match the item with the correct calculation.

Sales £4,200,000; Gross profit £2,700,000; Receivables £630,000; Payables £275,000; Inventory £300,000. ABC calculates its financial ratios based on being open for business 6 days per week for 50 weeks per year.

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5

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55

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45

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Q7-3: A company has capital employed of €1,000,000 and generates a profit after tax of €300,000. The change in return on investment between a Balance Sheet with 60% debt and one with 40% debt is:

Question options:

From 75% to   50%

From 50% to   75%

Q8-2: In a manufacturing business, the completion of production results in the following flow of costs for inventory:

Question options:

Decrease work   in progress and increase cost of sales

Decrease work   in progress and increase finished goods

Decrease   finished goods and increase cost of sales

Q8-3: A business purchases inventory stock on four separate occasions. Purchased 3,500 units at a total cost of €8,050; Purchased 3,000 units at a total cost of €7,110; Purchased 4,000 units at a total cost of €9,600; and Sold 5,995 units at a total price of €24,760. Each purchase was completed in the order provided within the same period. Match the inventory method with the correct cost of sales and the correct value of inventory.

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€13,963

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€4,082

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€3,896.75

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€14,148.20

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