- This topic has 1 reply, 2 voices, and was last updated 11 years ago by
.
- Posts
Hello Sir,
While doing a question in bpp rev kit i came across the point that a company can make right issue to reduce the level of debt in order to improve gearig
and the reaction of market to the right issue depends on the rating of the company and the purpose for which it is made and then it says that sales growth is slow ( 2 % over the past decade )and p/E ratio is low than sector avg which implies rating of company is low and the purpose here is not to finance new growth opportunities but to reduce the level of debt and given the flat market investors are unlikely to view such an issue as positive and thus the company has to issue it on large discount to make it attractive which in turn would increase earning dilution and impact badly on share price
My question is what is flat market and rating of company and what is the criteria for their judgement
Hope i am being clear in writing my query!!!
Kind RegardsA flat market is one where there is not much trading happening and share prices are not changing much.
By the rating of the company here it simply means the comparison between this company and other similar companies.
There are no specific criteria for judging – on the information here they are just comparing the sales growth and the PE ratios.
- You must be logged in to reply to this topic.