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Financial Management : Assignment Solution

Lecture slides for APC308 Financial Management course at Sunderland University.

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Added on  2021-02-19

Financial Management : Assignment Solution

Lecture slides for APC308 Financial Management course at Sunderland University.

   Added on 2021-02-19

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FINANCIAL MANAGEMENT
Financial Management : Assignment Solution_1
Introduction .....................................................................................................................................3(b).................................................................................................................................................31) Number of shares & Theoretical ex-right price ......................................................................33) Expected earnings per share....................................................................................................34) Forms of issue for each of the right issue price ......................................................................3(c) Critically evaluating the benefits of the scrip dividends to company and the shareholders .5(a) Calculation .............................................................................................................................6(b) Evaluating the advantages and the disadvantages of the capital budgeting techniques.........9CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
Financial Management : Assignment Solution_2
Introduction Financial management is considered as the organic function of the business organization as it relates with obtaining the physical resources for carrying out production activities and the other operations of the business with paying the compensation to suppliers. In other words financial management refers to the operational activity that focuses on acquisition of the funds, effective utilization of funds for gaining larger profitability. Financial management is been viewed as the integral part of an entire management instead of the staff that is concerned with theraising of the funds within the operation. The present study is based on various aspects of the financial statements that includes long term finance and the equity finance. Furthermore, it describes the several investment appraisal tools with its benefits and the limitations. Question 2(b)1) Number of shares & Theoretical ex-right price EX-right price refers to the market price that the stock theoretically has the new right issue (kob and Whitby, 2017). It is used by the company in order to offer more shares to the shareholders at the discounted price. 3) Expected earnings per shareEarning per share is been computed by dividing the profits of the company with that of the outstanding shares (Price and Williams, 2018). The resultant outcome reflect the profitabilityof an enterprise. It is common for the organization to report for the earning per share which is been adjusted for the potential dilution of the shares and the extraordinary items. 4) Forms of issue for each of the right issue price Right issue refers to the right that is given by the company to its existing shareholders forraising the additional capital (Mateus, Farinha and Soares, 2017). Right issue price is the price atwhich the new shares are been issued is less than the market price that is prevailing in the market. In other words, it means that the shares are issued at discount rate. ParticularsAmount (£)Current market value of Brand (6,00,000*1.90)11,40,000
Financial Management : Assignment Solution_3
Funds to be raised through right issue1,800000Final market value13,20,000ParticularsAmount (£)Earnings before rights issue (700000*0.2)1,40,000Earnings from new funds (1,80,000*0.2)36000Total earnings after rights issue1,76,000ParticularsRight issue price at 1.80Number of new shares (180000/1.80)1,00,000Total shares in issue (600000+100000)7,00,000Theoretical ex- rights price (1320000/700000)£1.89 per shareNew EPS =100*(176000/700000)25.14 price per shareForm of rights issue (600000/100000)6, i.e 1 for shares 6ParticularsRight issue price at 1.60Number of new shares (180000/1.60)1,12,500Total shares in issue (600000+112500)7,12,500Theoretical ex- rights price (1320000/712500)£1.85 per shareNew EPS =100*(176000/712500)24.7 price per shareForm of rights issue (600000/112500)5.33, i.e 1 for shares 5.33ParticularsRight issue price at 1.40Number of new shares (180000/1.40)1,28,571Total shares in issue (600000+128571)7,28571Theoretical ex- rights price (1320000/728571)£1.81 per shareNew EPS =100*(176000/728571)24.16 price per shareForm of rights issue (600000/128571)4.67, i.e 1 for shares 4.67
Financial Management : Assignment Solution_4

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