Page 415 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers to supplementary objective test

questions

1 C

2 C

3 A

Gearing = [(4,000 × 1.05) + 6,200 + (2,000 × 0.8)]/(8,000 × 2 × 5)

= 12,000/80,000 = 15%

4 A

All else being equal, less interest to pay will mean a higher interest cover.

(Interest cover = profit before interest and tax/interest)

Reducing debt will reduce the gearing ratio.

5 C

Using interest rate parity:

6 month forecast rate = 1.2020 × [1 + (5%/2)/1 + (3%/2)] = 1.2138

6 A

Dividend per share was ($2.5m/1m=) $2.50 in 20X2 and ($4.2m/1.5m=) $2.80
in 20X7 (5 years later)

Therefore, average annual growth rate is

5 √ (2.80/2.50) – 1 = 2.3%

7 A

Core disclosures or comprehensive disclosures can be applied by all entities,
regardless of their size, sector or location.

8 A, C, D

'Outlook' and 'Basis of preparation and presentation' are content elements for
Integrated Reporting, not GRI general standard disclosures.

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