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- February 9, 2023 at 8:07 am #678602sindParticipant
- Topics: 47
- Replies: 33
Extracts from the financial statements of Bluebell Co, a listed company, are as follows:
Profit before interest and tax 238
Finance costs (24)
Profit before tax 214
Corporation tax (64)
Profit after tax 150
Property, plant and equipment 768
Goodwill (internally generated) 105
Trade receivables 192
Total assets 1,350
Equity and liabilities
Total equity 688
Long?term borrowings 250
Trade payables 312
Short?term borrowings 100
Total current liabilities 412
Total liabilities 662
Total equity and liabilities 1,350
A similar size competitor company has a price/earnings ratio of 12.5 times.
This competitor believes that if Bluebell Co were liquidated, property, plant and equipment
would only realise $600m, while 10% of trade receivables would be irrecoverable and
inventory would be sold at $30m less than its book value.
Separately, Bluebell Co is considering the acquisition of Dandelion Co, an unlisted company
which is a supplier of Bluebell Co.
What is the value of Bluebell Co on a net realisable value basis?
A $140.8 million
B $470.8 million
C $365.8 million
D $1,027.8 million
I got the option B as the answer which is wrong. Can you show me the calculations .
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