A nave investor wants to analyze the capital structure of a company. He has the following...

Transcribed Image Text:

A nave investor wants to analyze the capital structure of a company. He has the following information: Long term debt (11%) Preferred stock (10%) Common stock (par Ksh. 10) Capital surplus Retained earnings Dividend paid ABC COMPANY 1990 12.27 0.13 0.01 5.67 33.93 3.005 1995 9.46 0.13 0.14 6.35 60.31 3.684 a) Is there any ground for such rumor? b) Is the capital structure sound? c) Is it proper to purchase the shares? Analyze the given data and advise him. 1998 11.19 0.12 12.6 6.19 125.2 10.08 The present price of the share in Nairobi Security Exchange is Ksh.450. there is a rumor in the market that the ABC Company may issue bonus shares shortly. The investor wants answers for the following (6 marks) (6 marks) (8 marks) A nave investor wants to analyze the capital structure of a company. He has the following information: Long term debt (11%) Preferred stock (10%) Common stock (par Ksh. 10) Capital surplus Retained earnings Dividend paid ABC COMPANY 1990 12.27 0.13 0.01 5.67 33.93 3.005 1995 9.46 0.13 0.14 6.35 60.31 3.684 a) Is there any ground for such rumor? b) Is the capital structure sound? c) Is it proper to purchase the shares? Analyze the given data and advise him. 1998 11.19 0.12 12.6 6.19 125.2 10.08 The present price of the share in Nairobi Security Exchange is Ksh.450. there is a rumor in the market that the ABC Company may issue bonus shares shortly. The investor wants answers for the following (6 marks) (6 marks) (8 marks)

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a Yes there is ground for such a ru... View the full answer