Financial Management, Financial Accounting

Assignment Help:
QUESTION 4:

Spanking Clean (Ltd) operate a number of car washes and auto valet services. The company has experienced a reasonable trading year. They are deciding whether to pay out R248 000 in accumulated cash in the form of a dividend to shareholders or embark on a share repurchase campaign. Current earnings are R7.20 per share and the share sells for R80.

Their abbreviated balance sheet before paying out the dividend is as follows:


Assets



Equity & Liabilities




Tangible assets

400

000

Equity

620

000


Inventories

40

000

Debt

180

000


Receivables

60

000








Bank/cash

300

000








Total

800

000

_ Total

800

000


Required:

4.1 Calculate the number of shares in issue if the company where to pay the dividend.

4.2 Calculate the number of shares in issue if the company where to repurchase its shares.

4.3 Spanking Clean (Ltd) is deciding whether to pay out a cash dividend or not.

Discuss the option of Dividend Reinvestment Plans and outline the benefits to the company and its shareholders.

4.4 Calculate the dividends per share (for the first alternative, i.e. pay the dividend)

4.5 Determine the net asset value of the firm should the company not exercise the option to repurchase its shares.

4.6 Determine the new share price, EPS and price-earnings ratio under both alternatives. (ie. pay the dividend or repurchase the shares).

Related Discussions:- Financial Management

Financial managment, How is a company’s cost of capital affected by its tax...

How is a company’s cost of capital affected by its tax rate?

Concept of accounting, what is the implication of applying accounting conce...

what is the implication of applying accounting concepts wrongly

What is comparability, What is Comparability This quality would en...

What is Comparability This quality would enable users to identify changes in the business over time (for instance, trend in sales revenue over the past five years). It wou

Consolidation, what is consolidation and its features?

what is consolidation and its features?

Off balance sheet financing, Q. Off balance sheet financing? A finance ...

Q. Off balance sheet financing? A finance charter exists when the substance of the lease is that the lessee enjoys substantially all of the risks and rewards of ownership even

Prepare a partial balance sheet, On December 31, 2014, Santana Company has ...

On December 31, 2014, Santana Company has $7,194,600 of short-term debt in the form of notes payable to Golden State Bank due in 2015. On January 28, 2015, Santana enters into a re

What is contractor ledger, Q. What is Contractor Ledger? Accounts relat...

Q. What is Contractor Ledger? Accounts relating to contractors should be kept as personal accounts in contractor's ledger and a separate folio should be opened in the Contracto

FASB and IASB - Revenue recognition, Q1. what are the roles and objective o...

Q1. what are the roles and objective of FASB and IASB? Q2.what are the main reason for the joint project undertaken by the FASB and IASB? Q3.state some critics by individual and th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd