Calculate price earnings ratio and payout ratio, Accounting Basics

Discuss and give reasons why a business would act in a socially responsible manner.

Part A:

 'Two of the key accounting reports available to users of accounting information are the income statement and the cash flow statement'.

a)  Explain the fundamental difference between an income statement and a cash flow statement.

b)  Why do decision-makers need both reports? Explain.

Part B:

a)   Explain why debt is a riskier form of finance for a business than equity.

b)   In relation to short-term liquidity explain:

i)    What the operating cycle is.

ii)   Why it is important.

c)     How does the quick asset ratio differ from the current ratio? Explain.

Part C:

The information below is available for two companies who are both listed on the stock exchange.

 

Black Ltd

Grey Ltd

Dividend payout ratio

80%

25%

Price earnings ratio

12:1

15:1

Explain in your own words what each of:

a)   The dividend payout ratio

b)   The price earnings ratio

is intended to measure (do not just give the formula for the ratio) and, discuss what the ratio results reveal about the differences between the two companies to a potential investor.

Posted Date: 3/19/2013 3:34:39 AM | Location : United States







Related Discussions:- Calculate price earnings ratio and payout ratio, Assignment Help, Ask Question on Calculate price earnings ratio and payout ratio, Get Answer, Expert's Help, Calculate price earnings ratio and payout ratio Discussions

Write discussion on Calculate price earnings ratio and payout ratio
Your posts are moderated
Related Questions
Importance of The bank statement Bank sends out bank statements each month. It's significant that this statement and checking account balance balances. There are certain items

Payroll implies with paying your employees (having seeing that the government gets the monies they require you to withhold from the employees and the payroll taxes they needs you t

Q. What is Marketable securities? Marketable securities are temporary investments such like short-term ownership of stocks and bonds of other companies. Such investments don't

Home Inc. is considering buying a new piece of equipment, which will cost $715,000 and has an economic life of 5 years, in order to make a new line of product.  The company believe

Based on the financial statements for Jackson Enterprises (income statement, statement of owner's equity, and balance sheet) shown below, prepare the following financial ratios.

1. If market interest rates are higher than the rate offered on the bonds being sold, they will be sold at: A. a premium. B. a discount. C. face value. D. a loss.

On January 1, 2012, Muller Co. borrowed cash from Washington Valley Bank by issuing a $100,000 face value 3-year installment note payable that carried a 7% interest rate. The note

Q. Explain about Long-term assets? Long-term assets are assets that a business has on hand or else uses for a relatively long time. Examples include plant, property and equipme

The Bayside Company uses the LIFO cost flow method to value inventory. In the current year, profit at Bayside is running unusually high. The corporate tax rate is also high this ye

Q. Show the examples of long-term assets? Property, plant, and equipment are assets with helpful lives of more than one year a company acquires them for use in the business r