Question: 1. A company has the following entries on its pro?t and loss statement: Turnover = £20,000, cost of goods sold = £10,000, operating expenses = £2,000, tax paid = £1,000 and pro?t before tax = £5,000. What is interest that has been payable on its loans?
2. Under UK law who has the first claim on the operating profits of a company?
a) Financial institutions who have made loans to a company.
b) The tax authorities (HMRC).
c) Shareholders.
d) Employees.
e) None of the above.
3. A company had shareholders equity equal to £3,700 million and long-term liabilities equal to £300 million in 2014. The operating profit for that year was £90 million pounds, its interest payments £10 million and its tax payments £12 million. What was its return on equity that year (ROE)?