Following is the Balance sheet of Jay Limited: Liabilities Equity Shares of Rs. 10 each Retained...

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Following is the Balance sheet of Jay Limited: Liabilities Equity Shares of Rs. 10 each Retained Earnings Amount Assets 300,000 200000 6% Preference Share of Rs.10 each 200,000 General Reserve Debenture Redemption Fund 5% Debentures Sundry Creditors Total Liabilities 5,000 25,000 60,000 90,000 880,000 Required: Calculate value per share by using following 1. Yield Method 2. Net Assets Method Fixed Assets Allowances for Depreciation Current assets Preliminary Expenses Unwritten Off Discount Total Assets Amount 600,000 (75,000) 340,000 10,000 5,000 880,000 Current Assets include investments of Rs.50,000 market price of which is Rs.90,000. Debtors included in current assets are doubtful to the extent of Rs. 25,000 for which no provision has been made so far. Debenture interest owes for two years and preference dividends are in arrear for two years. Earnings before tax is Rs.280,000 and Tax rate is 35%. The normal rate of dividend is 20%. Following is the Balance sheet of Jay Limited: Liabilities Equity Shares of Rs. 10 each Retained Earnings Amount Assets 300,000 200000 6% Preference Share of Rs.10 each 200,000 General Reserve Debenture Redemption Fund 5% Debentures Sundry Creditors Total Liabilities 5,000 25,000 60,000 90,000 880,000 Required: Calculate value per share by using following 1. Yield Method 2. Net Assets Method Fixed Assets Allowances for Depreciation Current assets Preliminary Expenses Unwritten Off Discount Total Assets Amount 600,000 (75,000) 340,000 10,000 5,000 880,000 Current Assets include investments of Rs.50,000 market price of which is Rs.90,000. Debtors included in current assets are doubtful to the extent of Rs. 25,000 for which no provision has been made so far. Debenture interest owes for two years and preference dividends are in arrear for two years. Earnings before tax is Rs.280,000 and Tax rate is 35%. The normal rate of dividend is 20%.

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1 Yield Method Step 1 Calculate the earnings available for equity shareholders Earnings before tax R... View the full answer