Case Asignment on Central Equipment Company

CASE ASIGNMENT ON CENTRAL EQUIPMENT COMPANY Calculate EPS:

Basis PBIT Itere!t "1#$ PBT TA/05$   PA PAT No. o7 out!ta-3 !are EPS

A

B

Debt 20 crore Equity no fresh

Equity 10 crore Debt 10 crore

Equity 20 crore Debt 0

12.5 Crore

12.5 Crore

12.5 Crore 2.% Crore &a' *.+ Crore , 0.0*5 Crore &' 4.0)5 Crore &' .1% &8'

C

1.# Crore &('

)

11.1 Crore &-'

12.5 Crore &e'

0.%%5 Crore &'

#.0+5 Crore &3'

+.215 Crore &6'

%.125 Crore &l'

.1%9.1)  .2% &'

.1%9.2)  .0% &o'

05.)### &;'

25.+4+%4 &<'

21.0%15% &r'

=OR>ING NOTE : &A'. Itere!t Itere!t : .1#?2)  2.% &B' Itere!t : .1#?1)  1.# &C' Itere!t : .1#?)  ) &@' PBT : 12.5/2.%  *.+ &E' PBT : 12.5/1.#  11.1 &' PBT : 12.5/)  12.5 &G' TA : *.+?.05 * .+?.05  0.0*5 &' TA : 11.1?.05  0.%%5 &I' TA : 12.5?.05  #.0+5 &' PA PAT T : *.+?0.0*5 *.+?0.0 *5  4.0)5 &>' PA PAT T : 11.1/0.%%5 11.1/0.% %5  +.215 &L' PA PAT T : 12.5/#.0+5 12.5/# .0+5  %.125 &M' No. Out!ta-3 !are !are : 1%D1))  .1% &N' No. Out!ta-3 Out!ta-3 !are !are : 1%D1)) 9 1)D1))  .1%9.1) .1%9.1)  .2% &O' No. Out!ta-3 !are !are : .1%D1)) 9 2)D1))  .1%9.2)  .0% &P' EPS : &PATDNO &PATDNO.. O OUTSTAN@ING SARE' 4.0)%D.1% 4.0)%D.1 %  05.)#### &Q' EPS : &PA &PATDNO. TDNO. O OUTSTAN@ING SARE' +.215D.2% +.215D.2 %  25.+4+%4

&R' EPS

: &PATDNO. O OUTSTAN@ING SARE'

%.125D.0%  21.0%15%

Ques 2. Why do a large number of board members seem to be against the use of debt? What are the real risks involved? Ques 3.How would you measure them? Ques 4. In addition to profitability and risk factors, what are other considerations before ! to decide about its debt policy? Ques5 . "hould it employ debt to finance its e#pansion? Ques$. %If a company is not paying dividend, it means it is of no good& If a company is paying handful of dividend, it means it is of good' ( omment on this statement