Answered: leone Collieries is deciding whether to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Corleone Collieries is deciding whether to pay out R60 000 in excess cash in the form of an extra dividend or a share repurchase. Current profits are R3,00 per share and the share sells for R30. Their abbreviated balance sheet before paying out the dividend is: Equity 240 000 Bank/cash 60 000 Debt 60 000 other assets 240 000 300 000 300 000 Evaluate each alternative (i.e.: pay the dividend or repurchase the shares) by: 1.1. Calculating the number of shares in issue. 1.2. The dividends per share (for the first alternative, i.e. pay the dividend) 1.3. Calculate: 1.3.1. The new share price. 1.3.2. The EPS 1.3.3. The price-earnings ratio

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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