| 1.94 | Unnamed: 1 | Unnamed: 2 | Unnamed: 3 | Unnamed: 4 | Unnamed: 5 | Unnamed: 6 | Unnamed: 7 | Unnamed: 8 | SOLUTION |
|---|---|---|---|---|---|---|---|---|---|
| A PLC | B PLC | C PLC | |||||||
| Equity Gearing Ratio = | (Preference Shares + Long-Term Loans : Ordinary Shares) | ||||||||
| (£600 + £1200 : £600) | (£600 + £600 : £1200) | (£600 + £0 : £1800) | |||||||
| (£1800 : £600) | (£1200 : £1200) | (£600 : £1800) | |||||||
| 3 | : 1 | 1 | : 1 | 0.3333333333333333 | : 1 | ||||
| Higher Gearing | Neutral Gearing | Low Gearing | |||||||
| Profit for the Year After Tax Calculation | |||||||||
| Profit for the Year (before Interest and Tax) | 240 | 240 | 240 | ||||||
| Less Debenture Interest | 120 | 60 | 0 | ||||||
| Profit for the Year (before Tax) | 120 | 180 | 240 | ||||||
| Less Corporation Tax | 30 | 45 | 60 | ||||||
| Profit for the Year (after Tax) | 90 | 135 | 180 | ||||||
| Earnings per Share = | (Profit for the Year after Tax - Preference Dividends) | ||||||||
| Number of Ordinary Shares | |||||||||
| £90 - £60 | £135 - £60 | £180 - £60 | |||||||
| 600 | 1200 | 1800 | |||||||
| 0.05 | 0.0625 | 0.06666666666666667 |