1 Ownership of the company What is the share structure do shares carry votes

1 ownership of the company what is the share

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1. Ownership of the company What is the share structure, do shares carry votes, who are the main shareholders, how important is the shareholding of directors and officers. 2. Top management Attempt should be made to assess the past performance of existing management and while this will be done in relation to profitability both absolute and relative, other factors should be looked at e.g. name, position, age, company service, service contracts, salaries, bonuses, and shareholding. 3. Finance The main purpose of the strategy is to try to elicit information which will enable management to determine two separate but closely related pieces of information.
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Firstly to ascertain the value based on the performance of the company to date which will likely have to be put on that company in order to achieve control and secondly the increased profitability which would arise for the parent company in the event of an acquisition being successful. The starting off point will of course be an analysis of the financial records of the company to be acquired, for example, to isolate operating profit from holding profit from extra-ordinary profit (or losses). 4. Completion Assessment of the market situation which the company will find itself in if the acquisition is successful. For example, how will it affect the existing situation, customers, etc? what new situations will present themselves?
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(b) The value of shares for amalgamation is based on forecasted equity earnings. It is assumed that P/E is applied in forecasting earnings rather than historic earnings. P/E ratio EPS Valuation per share Sh. Gimwa 20 x 000 , 000 , 90 000 , 750 , 33 . Sh = 7.50 Dallas 15 x 000 , 000 , 50 000 , 000 , 20 . Sh = 6.00 The total value of shares in the companies would be as follows: Gimwa (90,000,000 x 7.50) = 675,000,000 Dallas (50,000,000 x 6.00) = 300,000,000 NB: Company Number of ordinary shares Gimwa 10 . 000 , 000 , 90 . Sh Sh = 9,000,000 Dallas 10 . 000 , 000 , 50 . Sh Sh = 5,000,000 Thus the implied dividend yield would be: % 100 x Value Dividend Gimwa Dallas % Firm dividend (net) yield % 100 000 , 000 , 675 . 000 , 000 , 9 . x Sh Sh % 100 000 , 000 , 300 . 000 , 500 , 7 . x Sh Sh = 1.33% = 2.5% Earnings per share based on: Gimwa Dallas (i) 2002 earnings Sh.0.33 Sh.0.38 (ii) Forecast earnings Sh.0.375 Sh.0.40
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Despite the higher earnings per share of Dallas Company Ltd. based on the forecast earnings, a higher value has been placed on each share of Gimwa Company Ltd. on each share of Dallas Company Ltd. because of its lower gearing and therefore better borrowing potential and/or because of its better earnings potential or record in terms of both growth and consistency and the certainty of forecasts earnings for Gimwa Company Ltd. compared to Dallas Company ltd. in light of the past performance.
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NUMBER TWO (a) Year 1-5 6-10 11-20 21-40 2,000 x PVAF8%5 = 2000 x 3.993 1500(PVAF8%,10 PVAF10%5 = 1500(6.710 3.993) 800 (PVAF8%,20 PVAF8%,10) = 800(9.818 6.710) 400 (PVAF8%,40 PVAF8%,20) = 400(11.925 9.818) NPV (negative) (7,986) 4,076 2,486 843 (581) The project does not satisfy normal capital budgeting criteria.
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  • Winter '18
  • COMPANY LTD, Wahome Company Ltd, Gimwa

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