Example of Capital Structure of a Company
Example
Company XYZ restricted has the given capital structure as:
|
10,000 Sh.10 ordinary shares
10,000 Sh.20 preference shares
Total share capital
|
Shs.
100,000
200,000
300,000
|
Whether the company's assets proceeds were Sh.400, 000 illustrate how this would be shared under as:
i) Paripasu
ii) ½
Allocate participation taking on account the par value.
Solution
i) Whether the preference shareholders are participative as:
|
Asset proceeds
Less preference claims
Less ordinary shareholders claim
Residue
Total share capital =
|
Sh.
400,000
(200,000)
200,000
(100,000)
100,000
300,000
|
Participative claim of ordinary shareholders is provided via:
(200,000/300,000)*100,000= 66,667
ii) Sharing under ratio
|
Asset proceeds
Less preference claim
Less ordinary share capital
Participative claim
|
Shs.
400,000
(200,000)
200,000
(100,000)
100,000
|
Preference share capital claim= (200,000/300,000)*1/2=1/3
(1/3)* 100,000=Shs.33, 000
Ordinary share capital claim=(1/3)*(1/2)=1/6
(1/6)*100,000=16,667%