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Is it ok if i dont include long term provisions as part of debt while calculating gearing?
Also is government grant to be included in gearing calculation in the debt?I failed my presentation. I changed my mentor. Now do I have to make changes to my Learning statement too?
@ameera98 said:
Also, is capital subsidy a part of shareholders funds?“” Government grant
During the year ended 31 March 2013, an amount of ` 5 was received towards capital subsidy for the
Hajipur Factory, Bihar in accordance with the State Industrial Policy of Bihar. Out of this, an amount of
0.71 (31 March 2016:0.71) has been credited to the statement of profit and loss (by reducing the
depreciation charge for the year) and the outstanding amount of2.15 (31 March 2016:2.86, 1 April
2015: ` 3.57) has been classified as government grant in the balance sheet “”How do i deal with this in capital employed?
Capital employed is the sum of shareholders funds and interest bearing liabilities. So should it include deferred tax and long term provision?
And what if a particular loan is interest free?…Should it be included as well???
And the company I am calculating for includes deposits from customers as long term liability…is that interest bearing??What about the impact of changed credit rating on the old debt?…Why is that not taken into account?…the 120 million ild debt can also be afffected by the changed credit rating. But why dont we account for that in the earning calculation?
I am trying to relate this to Ennea (6/12) question.
Is there a difference in depreciation on shared assets and normal depreciation on the assets of the company?
Because according to me we should have simply added back 4 million depreciation to the post tax cash flow…since they say 4 million has been deducted in arriving at this cash flow. So i would not add 4x 30% tax….rather only 4million.Is it that if we take book value of equity we include reserves as well whereas we dont do that for market value.
The value of Mining dept using FCF is 47944. And they said the company will maintain 20:80 capital structure D:E. Why can i not find the MV of equity by multiplying 47944 by (80/100)??
Are we calculating the synergy. As in, the combined company value -(Cigno alone + Anatra Alone)
(60,000+R nd D (31884) + sale of manuf dept (5594) ) – (60000+30000)
which equals 7478 out of which premium of 21000*35% goes to anatra shareholders and remaining to Cigno.Is this approach correct? I am trying to relate this to Makonis of December 2013.
Thank you. So to summarize, we used the 8% here because we did not know the amount of the repayment. So the PV of repayments at coupon is equal to the loan, as a rule of thumb.
But in other normal cases, we use the kd or IRR to discount.why have we used 8% to find annuity for the equal repayments?
8% is not the cost of debt nor the yield to maturity..its the coupon right since they said ‘8%bond’…?Can someone please post the answer or link to the answer of this qs. I am unable to find the solution anywhere. Even the latest revision kit doesnt have it.
can we say g=75% retention rate * 12% cost of equity ( which is the return on equity) ?
I have a doubt with the weighting of each part of the business. if we are using the amount invested in the business as the weight, then for ppty it should be 2462 out of 6500 and for retail 4038/6500.
Why is the denominator 6800 and not 6500. I understand that 6800 is value of equity.
Secondly, i asked this qs before. But the thread is closed to new replies. The reduction in basis points by 30 bp..should be accounted for the 2 yr loan also. Why is onlythe 6 yr loan interest changing because of credit spread change?Hi sir.
I cant understand why while calculating impact on eps in part a for 1 st option are we adding 70 basis points plus Libor for the 2 yr loan. Given that the credit spread reduced by 30 basis points, according to me, we must add back (5.5%+0.3%) to reverse the interest.Hi sir. First of all, i would like to thank you for your continued support. My doubt is they say other calculations are acceptable if assumptions are stated. So if i assume that contribution of 20% willremain same all throughout, and now the contribution is 56 per unit (280*20%), will i be right?
Also, once they take forward the tax loss to the 3rd year, why are they adding it back???
And why do they not account for redundancy costs as opportunity costs for Imoni?…
Thanks in advance.Hi sir. For FCFE, are we not required to discount it to PV.
Also, why are the valuation methods different using FCF in business valuation and in. acquisition and merger.
I was expecting to use FCFE discounted at cost of equity or FCF discounted at WACC – Value of debt for this question.
However, in this qs, we are using simply FCF x g/1+g.I know this qs is silly. But I am very confused. Kindly help. I find so many methods of calculating value of company using FCF or FCFE. There is one with terminal value as well.
thanks for replying. But the cash flow will then be different. Because they said that tje effect of balancing allowance has not been included. they calculate balancing allowance as 25.7 – 25.7*0.25=19.27
19.27 – sale proceeds 7 = 12.27. So on 12.27*30%tax saving=3.68
If i calculate my way, its 25.7 – 7=18.7. 18.7*30% is 5.61
So i will adjust 5.61 in last yr. But they are adjusting 3.68 in last yr.Hi sir. my doubt is in the capital allowance calculations. the first allowance be claimed in yr0, 2nd in yr 1, 3rd in yr 2, 4th in yr 3, 5th in yr 4, 6th in yr 5, then the written down value is 25.7 at end of yr 5. According to me, the balancing allowance is 25.7-7=18.7 and tax allowance be available on 18.7. The answer in BPP calculates balancing allowance after calculating 25% for one more year. But according to me, the plant will be sold at end of yr 6. so in yr of disposal,.i.e, yr 6, we should not calculate 25%. and instead calculate balancing allowance.
Where am I wrong??Hi mr mike
I too use the method given by gillers for calculating the Change to paremts equity on disposal of Nathan in Marchant. Accordingly
Sale proceeds 18
Less. Fair value of net assets on disposal(120+14 land+ 12 impaired goodwill) x 8%. =(11.68)anf hence the adjustment to parents equity of 18-11.68=6.32…
whereas in the answer its 7.32…
kindly advise me on this.