the capital structure of chavboro a quoted company during the years ended 31 october 537888
The capital structure of Chavboro, a quoted company, during the years ended 31 October 2005 and 2006 was as follows:
|
$ Don't use plagiarized sources. Get Your Custom Essay on
the capital structure of chavboro a quoted company during the years ended 31 october 537888
For $10/Page 0nly
|
|
|
6,000,000 ordinary shares of 50 cents |
3,000,000 |
|
10% preferred shares of $1 |
200,000 |
|
300,000 deferred ordinary shares of $1 |
300,000 |
|
12% convertible loan stock |
250,000 |
The company has an executive share option scheme which gives the company”s directors the option to purchase a total of 100,000 ordinar y shares for $2.10 each. During the year ended 31 October 2006 no shares were issued in accordance with the share incentive scheme and the company”s obligations under the scheme remained unchanged.
On 31 August 2006 Chavboro plc made a 1 for 6 rights issue at $2.50 per share. The cum-rights price on the last day of quotation cum rights was $2.85 per share. The shares issued in the rights issue are not included in the figure for ordinary shares given above. The deferred ordinar y shares will not rank for dividends until 1 November 2010 when they will each be divided into two 50 cents ordinary shares ranking pari passu with the other ordinar y shares then in issue.
The 12% loan stock is convertible into 50 cents ordinary shares on the following terms:
(i) if the option is exercised on 1 November 2007 each $100 of loan stock can be converted into 40 ordinary shares;
(ii) if the option is exercised on 1 November 2008 each $100 of loan stock can be converted into 35 ordinary shares.
The following information comes from the statement of comprehensive income of the company for the year ended 31 October 2006:
|
$ |
|
|
Profit before interest and tax |
1,253,000 |
|
less Interest |
30,000 |
|
1,223,000 |
|
|
less Income tax, at 30% |
366,900 |
|
Profit attributable to shareholders |
856,100 |
You may assume that the yield on 2.5% government consolidated stock was 7.5% on 1 November 2005 and 6% on 1 November 2006, and that the rate of income tax is 30% throughout. Chavboro plc”s reported earnings per share for the year ended 31 October 2005 were 10 cents.
Required:
(a) Calculate Chavboro plc”s basic earnings per share in cents for the year ended 31 October 2006.
(b) Calculate Chavboro plc”s restated earnings per share in cents for the year ended 31 October 2005.
(c) Calculate Chavboro plc”s fully diluted earnings per share in cents for the year ended 31 October 2006.
(d) Calculate Chavboro plc”s fully diluted earnings per share in cents for the year ended 31 October 2005.
(e) How can an investor evaluate the quality of the earnings per share figure published in a company”s financial statements?
Calculator
Our features
We've got everything to become your favourite writing service
Money back guarantee
Your money is safe. Even if we fail to satisfy your expectations, you can always request a refund and get your money back.
Confidentiality
We don’t share your private information with anyone. What happens on our website stays on our website.
Our service is legit
We provide you with a sample paper on the topic you need, and this kind of academic assistance is perfectly legitimate.
Get a plagiarism-free paper
We check every paper with our plagiarism-detection software, so you get a unique paper written for your particular purposes.
We can help with urgent tasks
Need a paper tomorrow? We can write it even while you’re sleeping. Place an order now and get your paper in 8 hours.
Pay a fair price
Our prices depend on urgency. If you want a cheap essay, place your order in advance. Our prices start from $11 per page.