Evaluate the usefulness of the annual report to CP's shareholders in deciding whether to sell their shares.
Exam No：9609_w23_qp_31 Year：2023 Question No：4(b)
Answer:
Knowledge points:
10.1.1.1 the meaning and purpose of the statement of profit or loss
10.1.1.2 the contents of a statement of profit or loss: revenue, cost of sales, gross profit, expenses, profit from operations (operating profit), taxation, profit for the year, dividends, retained earnings
10.1.1.3 amendment of a statement of profit or loss
10.1.1.4 the impact on the statement of profit or loss a given change
10.1.2.1 the meaning and purpose of statement of financial position
10.1.2.2 the contents of a statement of financial position including non-current assets, current assets, current liabilities, net current assets, net assets, non-current liabilities, reserves and equity
10.1.2.3 amendment of a statement of financial position
10.1.2.4 the relationships between items in the statement of profit or loss and the statement of financial position
10.1.3.1 the difficulties of valuing inventory
10.1.3.2 the net realisable value method
10.1.4.1 the role of depreciation in the accounts
10.1.4.2 the impact of depreciation (straight-line method only) on the statement of financial position and the statement of profit or loss
10.2.1.1 the meaning and importance of liquidity
10.2.1.2 current ratio: calculation and interpretation
10.2.1.3 acid test ratio: calculation and interpretation
10.2.1.4 methods of improving liquidity
10.2.2.1 the meaning and importance of profitability
10.2.2.2 return on capital employed: calculation and interpretation
10.2.2.3 gross profit margin: calculation and interpretation
10.2.2.4 profit margin: calculation and interpretation
10.2.2.5 methods of improving profitability
10.2.3.1 the meaning and importance of financial efficiency
10.2.3.2 rate of inventory turnover: calculation and interpretation
10.2.3.3 trade receivables turnover (days): calculation and interpretation
10.2.3.4 trade payables turnover (days): calculation and interpretation
10.2.3.5 methods of improving financial efficiency
10.2.4.1 the meaning and importance of gearing
10.2.4.2 gearing ratio: calculation and interpretation
10.2.4.3 methods of improving gearing
10.2.5.1 the meaning and importance of return to investors
10.2.5.2 dividend yield: calculation and interpretation
10.2.5.3 dividend cover: calculation and interpretation
10.2.5.4 price/earnings ratio: calculation and interpretation
10.2.5.5 methods of improving investor return
Solution:
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