Non-Current assets Land and buildings Plant and equipment Current assets Inventory Debtors Cash Creditors: amounts falling...

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Non-Current assets Land and buildings Plant and equipment Current assets Inventory Debtors Cash Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Creditors: amounts falling due within one year: 12% loan repayable 2021 Share capital and reserves 8% cumulative preference shares of K1 each Ordinary shares of K1 each Income statement K (a) Issue additional ordinary shares (b) Issue additional 8 per cent preference shares. (c) Raise an additional long-term loan at 12 per cent. 50,000 40,000 5,000 95,000 25,000 K 40,000 90,000 130,000 70,000 200,000 90,000 110,000 K 30,000 50,000 30,000 110,000 The board of directors has identified the following possible alternative ways of obtaining the additional K50,000 required during the following year.: Discuss the company's existing capital structure in terms of its gearing, and examine the advantages and disadvantages of each alternative method of financing its expansion plan. Non-Current assets Land and buildings Plant and equipment Current assets Inventory Debtors Cash Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Creditors: amounts falling due within one year: 12% loan repayable 2021 Share capital and reserves 8% cumulative preference shares of K1 each Ordinary shares of K1 each Income statement K (a) Issue additional ordinary shares (b) Issue additional 8 per cent preference shares. (c) Raise an additional long-term loan at 12 per cent. 50,000 40,000 5,000 95,000 25,000 K 40,000 90,000 130,000 70,000 200,000 90,000 110,000 K 30,000 50,000 30,000 110,000 The board of directors has identified the following possible alternative ways of obtaining the additional K50,000 required during the following year.: Discuss the company's existing capital structure in terms of its gearing, and examine the advantages and disadvantages of each alternative method of financing its expansion plan.

Answer rating: 100% (QA)

Companys existing capital structure in terms of its gearing ratio Gearing Ratio Ordinary Share Earin... View the full answer