Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
a) Debentures are a source of external long term (loan) finance for which interest is paid to the debenture holder. Debenture holders do not usually have voting or ownership rights in the organisation.
b) Year 2
Year 1
250 ÷ 1,000
250 ÷ 800
= 25 %
= 31.25 %
Full working out compulsory for full marks
c) The gearing ratio is a long term liquidity ratio that calculates the percentage of a firm's capital employed that comes from long-term liabilities, such as debentures. JKL Ltd. has less than 50% gearing so is considered to be comparatively safe, given the limited information given.
The firm has lower gearing in Y2 meaning that it is less susceptible to any increases in interest rates, i.e. it represents less risk. However, there is a need to benchmark this ratio with the industry norm before any firm conclusions can be prepared about the organisation's liquidity position.
d) The costs and remuneration of high gearing should be considered. For example, having high gearing during times of rising interest rates is likely to be risky (even if the economy is doing well) as the higher loan repayments will obstruct the firm's working capital. However, high gearing might be essential for a firm that lacks internal funds to finance growth and evolution.
In the case of JKL Ltd. the fall in its gearing ratio is not essentially a good thing, e.g. can JKL Ltd. afford to have higher gearing to money expansion, particularly since it has higher net profit and retained profit in Y2.
Why do businesses spend time, effort, and money to produce forecasts? Explain. Businesses succeed or fail relies on how well organized they are to deal with the situations they
Entity A is significantly smaller than B in terms of revenue and would not impact LOP's revenue to the same extent. However A earns a noticeably better gross profit margin at 26% a
Performance evaluation One can determine this by comparing the cash flow from assets and cost of capital. 1. Cash flow from assets Cash flow from assets is calculated
What are the characteristics of an efficient market? The term market efficiency denotes to the ease, speed, and cost of trading securities. In an efficient market the securitie
what is the goal of financial manager
Permanent and Temporary Working Capital, I am looking for assignment help on the topic Permanent and Temporary Working Capital. It would be great if anyone help me.
Assume a bank charges a 15.5% APR (annual percentage rate) on credit card holder compounds quarterly. What EAR (effective annual rate) is the bank is charging? What if they change
Under what circumstance would the U.S. dollar and the Canadian dollar be said to have achieved purchasing power parity? The U.S. dollar and the Canadian dollar would be referred
Q. Calculation of WMCC? The calculation of WMCC requires several steps to be taken and is subject to the following assumptions: 1) The WMCC is calculated on the basis of market
A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper i
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd