The following are the balance sheets of Kay Ltd and Jay Ltd as on 31st March 2010 Particulars

Kay Ltd Jay Ltd Liabilities Equity share capital of Rs.10 each General reserve Profit & Loss A/c Debentures Creditors Bills payable Assets Fixed Assets Investments Current Assets

The Board of Directors of Kay Ltd approve to take over Jay LTD as on 30th Sep 2010. Find out the ratio of its exchange of shar Solution Particulars Fixed Assets Investments Current Assets Less Liabilities Creditors Bills payable Debentures Net Assets No. of Shares Intrinsic value per share L.C.M. of Intrinsic value of shares No. of Shares for exchange Kay Ltd Jay Ltd

out the ratio of its exchange of shares on the basis of book values.

The following is the balance sheet of P ltd as on 31st march 2010 Particulars Liabilities Share capital 10000 12% preference shares of Rs. 10 each fully paid 30000 equity shares of rs. 10 each fully paid General reserve Debenture redemption fund Depreciation fund 10% Debentures Sundry Creditors Assets Sundry Assets Preliminary expenses Discount on Debentures Profit & Loss A/C The debenture interest is owing for six months & Preference Dividend in Arrears for one year. Assuming Assets are worth their book values, show the approximate valuation of shares if ; I Preference Shares are preferential as to capital & arrears are payable in a winding up, and II Preference Shares are preferential as to capital but arrears of Preference Dividends are not payable Solution Valuation of Shares Rs. Assets Less Depreciation Funds 10% Debentures Sundry Creditors Debenture Interest(six month due) Net Assets Less :Due to preference shareholders Preference Capital Arrears of Preference Dividends for one yr.@12% Belonging to equity Shareholders Total Value of Preference Shares No. of Preference Shares Value of Preference Share Total Value of Equity Shares No. of Equity Shares Value of Equity Share

The profit of X Ltd for the year ended 31st March 2010 were Rs 60,00,000. After setting apart amounts for interest on borrowing taxation, and other provisions, the net surplus available to shareholders is estimated at Rs 15,00,000. The company's capital ba (i)1,00,000 Equity shares of Rs 100 each, Rs 50 per share paid up, and (ii) 25,000 12% Cumulative Redeemable Preference Shares of Rs 100 each, fully paid up Enquiries in the stock market reveal that shares of companies engaged in similar business and declaring a dividend of 15% on e are quoted at a premium of 10%. What do you expect the market value of the company's shares to be, basing your working on y Solution Net surplus available to shareholders Less: Preference Dividend 12% Amount available for equity dividend Expected market value of share at 15% dividend - Paid up amount - Premium on equity shares 10% Market value of preference shares Company's rate of dividend Dividend rate of companies in similar business Value per share

nts for interest on borrowings 0. The company's capital base consisted of

aring a dividend of 15% on equity shares be, basing your working on yield method