Information of ABC company given below |Amount in OMR Particulars 200,000 10,000 Gross Sales Returns Inward Gross Profit Ratio |20% on net sales Operating Expenses Interest Expenses Тax Paid Dividends paid 20,000 2,000 40% |20% of profit after taxes Total number of outstanding shares 10,000 MPS 4 Answer below questions
Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
ABC company Earnings Per Share value is؟
2. Interest coverage ratio of the company is؟
3. Given companies Dividend coverage ratio is؟
4.Price Earning Ratio of above company should be؟
5.Increase in tax rate by 10% will give a new Price Earning ratio of؟
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