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I cannot understand why they have addes the gain on disposal and cash proceeds from disposal while calculating FCFE for dividend capacity i havr never done this in any question whats the concept of doing here
And part a (ii) calculations please explain how the calculations to calculate dividends required from bowerrscot to maintain dividend level of 0.74 per equity share are done
It is the same concept as used when preparing statement of cash flows in financial accounts exams.
They want the cash available for dividend. The profit figure needs adjusting for depreciation and profit on sale, because they are not cash flows. The cash received from the sale needs bringing in because it is a cash flow.
For a (ii), there used to be 90M shares. They had a 1 for 3 rights issue, so they issued another 30M shares, which means 120M shares now in issue. They want to be able to pay a dividend of $0.74 per share which means they need 120M x $0.74.
Ok i got ur above 2 points but cannot get why the shortfall of 12148 is grossed up at 5% is it because of withholding tax
Hi sir, may i know for the forecast dividend capacity, less taxation ($108.16m-$10.8m) the 10% come from? why do we need to subtract the $10.8m?
starxberries96: the $10.8m is not 10% of anything!!! It is the interest (8% x $135m) and tax is, as always, charged on the profit after interest.
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