4 Black-Rock Pharmaceuticals Price Earnings (PE) ratio is currently 12.4. The sector average P/E ratio is 9.3 Which one of the following statements is correct? A B C D Black-Rock is seen to be a more risker investment compared to the sector average: there is decreased confidence about Black-Rock's future. Black-Rock is viewed as a less risky investment compared to the sector average: there is decreased confidence about Black-Rock's future. Black-Rock is seen to be a more risker investment compared to the sector average: there is increased confidence about the future of Black-Rock. Black-Rock is viewed as a less risky investment than the sector average, therefore, there is increased confidence about the future of Black-Rock. Question 5 The following financial information relates to Ribeye concerning the year end 31 December 2021. Ribeye's cash cycle at 31 December 2021 is 80 days. Inventory turnover ratio is six times. Year-end payables are 280,000. Credit purchases for the year ended 30 October 20X9 is 2 million. Cost of sales is 1.9 million. Which one of the following is RibEye's trade receivables collection period? A 61 days B 90 days C 51 days D 70 days Question 6 Holiday Co have decided to sell their central office, which meets the held for sale criteria per IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. The central office was purchased 15 years ago, at a cost of 550,000 and was estimated to have a useful life of 25 years. Holiday Co believe that they can sell their central office for 410,000, but costs to sell will total 60,000. At what value should the asset be valued when classified as held for sale? A B 220,000 350,000 C 410,000 D 550,000 Question 7 on the next page Question 7 Which of the following arguments is not in favour of entities being required to comply with accounting standards? A They reduce variations in methods used to produce accounts B They oblige companies to disclose their accounting policies C They are a less rigid alternative to legislation D They may tend towards rigidity in applying the rules Question 8 Which of the following statements best defines the current ratio? A B C D The ratio of current assets to current liabilities. For most businesses, it should ideally be about 2 The ratio of current assets to current liabilities. For the majority of businesses, it should ideally be about 1 The ratio of current assets excluding inventory to current liabilities. For the majority of businesses it should ideally be about 1 The ratio of current assets excluding inventory to current liabilities. For the majority of businesses it should ideally be about 2 Question 9 PR Ltd has issued 6% loan notes with a nominal value of 65,000 at 1 January 2018. Issue costs totalled 750. The effective interest rate for the loan notes is 8%. What is the finance cost in the statement of profit or loss for the year ended 31- December 20212 A 5,200 B 3,855 C 5,140 D 3,900 Question 10 Plum Ltd is suing a supplier for damages. Legal advisors have said that there is a 40% chance that Plum Ltd will win the case. If they do win, Plum Ltd would receive compensation of approximately 300,000. What is the correct accounting treatment of the above? A Do not disclose the issue ABCD Disclose the issue Recognise an asset for 160,000 Recognise an asset for 300,000 Section A -Total 20 marks available