Unit: Financial Management
16 Questions| Year | Machine A | Machine B |
| Cash inflows "Sh.000" | Cash inflows "Sh.000" | |
| 0 | (30,000) | (30,000) |
| 1 | 8,400 | 8,400 |
| 2 | 9,600 | 9,000 |
| 3 | 14,000 | 8,000 |
| 4 | 16,000 | 10,000 |
| 5 | 4,000 | 20,000 |
| Sh."000" | Sh."000" | |
| Equity: | ||
| Ordinary shares (each Sh.5 par value) | 16,000 | |
| Reserves | 72,000 | 88,000 |
| Long term liabilities: | ||
| 4% preference shares (each Sh.10 par value) | 12,000 | |
| 7%, 6 year redeemable bonds | 12,000 | |
| Long term bank loan | 4,000 | 28,000 |
| 116,000 |
| 1. | The ordinary shares of Panda Ltd. have an ex-dividend market value of Sh.47 per share and an ordinary dividend of Sh.3.63 per share has just been paid. Historic dividend payments have been as follows: |
| 1. | Year | 2018 | 2019 | 2020 | 2021 |
| Dividend per share (Sh.) | 3.09 | 3.22 | 3.36 | 3.50 |
| 2. | The preference shares of Panda Ltd. are not redeemable and have an ex-dividend market value of Sh.4 per share. |
| 3. | The 7% bonds are redeemable at a 5% premium to their nominal value of Sh.100 per bond and have an ex-interest market value of Sh.104.50 per bond. |
| 4. | The bank loan has a variable interest rate that has averaged 4% per year in recent years. |
| 5. | The corporate tax rate applicable to Panda Ltd. is 30% per year. |
| Economic | End of year market price (Sh.) | ||
| Condition | Probability | Share A | Share B |
| Best | 0.40 | 50 | 60 |
| Fair | 0.30 | 42 | 50 |
| Poor | 0.30 | 35 | 40 |
| Jolop Ltd. Statement of comprehensive income for the year ended 31 December 2021 | ||
| Sh."000" | Sh."000" | |
| Sales | 200,000 | |
| Less: Sales returns | 5,000 | 195,000 |
| Cost of sales: | ||
| Opening stock | 3,000 | |
| Purchases | 127,000 | |
| Closing stock | (5,000) | (125,000) |
| Gross profit | 70,000 | |
| Other income (loss): | ||
| Loss on sale of plant | (5,000) | |
| ividend received | 10,000 | |
| Total revenue | 75,000 | |
| Less expenses: | ||
| Administrative expenses | 15,000 | |
| Distribution expenses | 20,000 | (35,000) |
| Net income/profit | 40,000 | |
| Jolop Ltd.
Statement of financial position as at 31 December 2021 | |
| Assets | Sh."000" |
| Non-current assets: | |
| Land | 150,000 |
| Building | 200,000 |
| Plant and equipment | 200,000 |
| Total non-current assets | 550,000 |
| Current assets: | |
| Inventory | 80,000 |
| Accounts receivable | 50,000 |
| Bank balances | 20,000 |
| Total current assets | 150,000 |
| Total assets | 700,000 |
| Equity and liabilities: | |
| Equity | |
| Equity share capital (50 million shares of Sh.10 each) | 500,000 |
| General reserve | 50,000 |
| Retained earnings | 70,000 |
| Total equity | 620,000 |
| Current liabilities: | |
| Accounts payable | 80,000 |
| Total equity and liabilities | 700,000 |
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