Reference no: EM132919846
Problem 1: The formula used to calculate current ratio
a. C) Inventory / Current liabilities
b. A) Current liabilities / Current assets
c. D) Current liabilities / Inventory
d. B) Current assets / Current liabilities
The following is the capital structure of XYZ Ltd as at 31/12/2002.
shs.M
Ordinary share capital Sh.10 par value- 400
Retained earnings- 200
10% preference share capital Sh.20 par value- 100
12% debenture Sh.100 par value- 200
Additional information
1. Corporate tax rate is 30%
2. Preference shares were issued 10 years ago and are still selling at par value MPS = Par value
3. The debenture has a 10 year maturity period. It is currently selling at Sh.90 in the market.
4. Currently the firm has been paying dividend per share of Sh.5. The DPS is expected to grow at 5% p.a. in future. The current MPS is Sh.40.
Required
Problem 2: Calculate the total market value of this firm