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BURCOLENE QUESTION

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BURCOLENE QUESTION

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
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  • January 23, 2017 at 10:45 pm #369127
    bilalahmad99
    Member
    • Topics: 48
    • Replies: 53
    • ☆☆

    PART B (ii):
    Implication of an acquisition on its gearing and cost of capital.
    In model answers the authors uses the terms surplus shareholders value, market gearing and acquisition value I don’t get these terms. Could you please explain these 3 terms John. Thank you

    January 24, 2017 at 7:55 am #369177
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Surplus shareholder value is the extra value of the shares as a result of the acquisition.

    Market gearing is the gearing based on the market values of debt and equity (as opposed to the book values).

    Acquisition value is the amount paid to shareholders of the company being acquired.

    January 24, 2017 at 9:47 am #369242
    bilalahmad99
    Member
    • Topics: 48
    • Replies: 53
    • ☆☆

    Thanks John.

    January 24, 2017 at 2:07 pm #369297
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

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