bbs stores (june 09)

[fahad132]

Sir i am much confused with the shares part , rest whole question is ok
1)-
part(a)

$4 per share.

repurchase 871/4 = $217.75M shares
nominal value of 217.75 x $0.25 = 54.44.
871 to repurchase the shares
54.44 will reduce the share capital
The above part is ok
but in earning per share calculation the no of shares are 1,700 (425*4)
m.v of eq is 425 then how we multiply by 400 cent per share is where i am confused

2)-reduction in credit spread on 6 year debt (0.3% ×
$770m × 65%) it should be 3% right (70 basis – 40 basis) why it is showing 0.3%

3)-
part(b)-
425m × 4 × 4
option one or two when arriving at the value of equity
we are multiplying it twice by 4 , why that , what is that 4 basically??

what i understand from this question is that the 0.25 is the value of share and to arrive at shares you should divided by 4(i.e 400c per share) , but it is multiplied several times.

Please advise??

[John Moffat]

1. 425 is the total nominal value of the shares. The nominal value is $0.25 per share. Therefore the total number of shares is 425/0.25 (which is the same as 425 x 4).

2. 1 basis point is 0.01%. Therefore 30 basis points is 0.3%

3. See answer to (1).

[fahad132]

thank you so much sir

[John Moffat]

You are welcome 🙂

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