| 1.92 | Unnamed: 1 | Unnamed: 2 | Unnamed: 3 | Unnamed: 4 | Unnamed: 5 | Unnamed: 6 | Unnamed: 7 | SOLUTION |
|---|---|---|---|---|---|---|---|---|
| Plastimould PLC | Aluflex PLC | Polycraft PLC | ||||||
| £OOO | £OOO | £OOO | ||||||
| Equity Gearing Ratio = | (Preference Shares + Long-Term Loans : Ordinary Shares) | |||||||
| (£1400 + £1000 : £1200) | (£1600 + £0 : £2000) | (£600 + £0 : £3000) | ||||||
| (£2400 : £1200) | (£1600 : £2000) | (£600 : £3000) | ||||||
| 2 | : 1 | 0.8 | : 1 | 0.2 | : 1 | |||
| Lowest Gearing | Polycraft PLC | |||||||
| It has the highest proportion of ordinary share equity | ||||||||
| Plastimould PLC would be the company which would be most attractive to Ordinary Shareholders when business conditions are good | ||||||||
| because there is a small percentage of ordinary shares in relation to fixed interest equity. As a result, a larger proportion of the profits | ||||||||
| is available to Ordinary Shareholders as dividend and the dividend per ordinary share would be higher. | ||||||||
| Available Profit for Ordinary Shareholders | ||||||||
| Plastimould PLC | Aluflex PLC | Polycraft PLC | ||||||
| Profit for the Year (before tax) | 720000 | 720000 | 720000 | |||||
| Less Debenture Interest | 80000 | 0 | 0 | |||||
| 640000 | 720000 | 720000 | ||||||
| Less Corporation Tax | 120000 | 120000 | 120000 | |||||
| 520000 | 600000 | 600000 | ||||||
| Less Preference Dividend | 98000.00000000001 | 112000.00000000001 | 42000.00000000001 | |||||
| Available Profit | 422000 | 488000 | 558000 | |||||
| Earnings per Share = | (Profit for the Year after Tax - Peference Dividends) | |||||||
| Number of Ordinary Shares | ||||||||
| 422000 | 488000 | 558000 | ||||||
| 1200000 | 2000000 | 3000000 | ||||||
| 0.3516666666666667 | 0.244 | 0.186 | ||||||
| Price Earnings Ratio = | Market Price per Share | |||||||
| Earnings per Share | ||||||||
| 2.4 | 3 | 4 | ||||||
| 0.3516666666666667 | 0.244 | 0.186 | ||||||
| 6.824644549763033 | times | 12.295081967213115 | times | 21.50537634408602 | times | |||
| Dividend Yield = | Ordinary Dividend per Share | |||||||
| Market Price per Share x 100% | ||||||||
| 0.4 | 0.3 | 0.2 | ||||||
| £2.40 x 100% | £3.00 x 100% | £4.00 x 100% | ||||||
| 0.16666666666666669 | 0.09999999999999999 | 0.05 | ||||||
| Dividend Cover Ratio = | (Profit for the Year after Tax - Preference Dividends) | |||||||
| Dividends on Ordinary Shares | ||||||||
| 422000 | 488000 | 558000 | ||||||
| 1,200,000 x £0.40 | 2,000,000 x £0.30 | 3,000,000 x £0.20 | ||||||
| 422000 | 488000 | 558000 | ||||||
| 480000 | 600000 | 600000 | ||||||
| 0.8791666666666667 | times | 0.8133333333333334 | times | 0.93 | times |