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

Personal property, Personal Property - Movable property which isn't affixed...

Personal Property - Movable property which isn't affixed to land (REAL PROPERTY). Personal property comprises tangible items likecars, cash and computers and intangible items, like

Income statement, depreciation in question is given more and in adjustment ...

depreciation in question is given more and in adjustment is less. What would be in the profit and loss account?

Example on differential cash flows, Q. Example on Differential cash flows? ...

Q. Example on Differential cash flows? Differential cash flows: contracting out versus in-house provision NET PRESENT VALUE =£45519 The positive NPV signifies th

One period rate - equilibrium, Suppose that the one-period rate is 4%. Expl...

Suppose that the one-period rate is 4%. Explain why a two-period rate of 6% cannot be an equilibrium when individuals expect the one-period rate to remain constant.

What do you mean by fiscal year, Q. What do you mean by Fiscal Year? Fi...

Q. What do you mean by Fiscal Year? Fiscal Year - Period of 12 consecutive months chosen by an entity as its ACCOUNTING period that may or may not be a calendar year. Fixed Ass

Net present value evaluation of proposed investment, Q. Net present value e...

Q. Net present value evaluation of proposed investment? WORKINGS Fixed costs = 4·50 × 100000 = $450000 per year Annual writing down allowance = 3000000/10 = $300000

Writing a dissertation, I want to do a custom dissertation on IAS 40 invest...

I want to do a custom dissertation on IAS 40 investment property which needs to include a brief outline, positive as well as negative international critique with respect to the sta

Income statement, given the following information: cash-171,100 accounts re...

given the following information: cash-171,100 accounts receivable-9400 prepaid studio rent-3000 unexpired insurance-7200 supplies-500,equipment-18,000 accumulated depreciation-7200

Profit on initial investment, The common stock of the PP Corporation has be...

The common stock of the PP Corporation has been trading in a narrow price range for the past month, and you are convinced it is going to break far out that range in the next 3 mont

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