Answered: Pukri Ltd is deciding whether to pay…

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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Question

Pukri Ltd is deciding whether to pay out R90 000 in excess cash in the form of an extra
dividend or a share repurchase. Current profits are R2,40 per share and the share sells for
R20. The abbreviated balance sheet before paying out the dividend is:
Equity 240 000 Bank/cash 90 000
Debt 160 000 Other Assets 310 000
400 000 400 000
Evaluate each alternative (i.e: pay the dividend or repurchase the shares) by:
1.3 Calculate:
1.3.1 The new share price

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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