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i)Optimum use of resources
ii)Maximum profit with minimum effort
iii)Maximum prosperity for both employees and employer
iv)Human betterment and social justice
v)Organization of roles
vi)Sound organization
vii)Equilibrium
viii)It is essential for prosperity of the organization
ix) It increases efficiency of factors of production.
Hildah Wafula answered the question on March 7, 2019 at 06:57
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Date posted: February 12, 2019. Answers (1)
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The following six have been submitted for inclusion in 1998 capital expenditure budget for
Limuru Ltd.
Required:
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projects in descending order.
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
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The following information is provided in respect to the affairs of Pote Limited which prepares
its account on the calendar year basis.
Required:
a) Calculate the rate of stock turnover expressed:
i) as a ratio;
ii)in days for each of the years 1994 and 1995.
b) Calculate the rate of collection of debtors, in days, for each of the years 1994 and 1995.
(3 marks)
c) Calculate the rate of payment to creditors, in days, for each year 1994 and 1995.
(3 marks)
d) Show the cash operating cycle for each year.
e) Comment on the results.
Date posted: February 12, 2019. Answers (1)
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Mr. Castro uses a 20% hatch system of timing when to invest in a stock market. In a
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Date posted: February 12, 2019. Answers (1)
- With reference to capital market, define the following terms:
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
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Date posted: February 12, 2019. Answers (1)
- Love Ltd is considering acquiring Beautiful Ltd. For the past six years, the profits of Beautiful
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Love Ltd is considering acquiring Beautiful Ltd. For the past six years, the profits of Beautiful
Ltd. has been as follows.
Love Ltd expects to pay a DPS of Sh.3.20. The current MPS is Sh.40. The growth in dividends
will be matched with the growth in earnings of Beautiful Ltd. once acquired. The future
expected profits p.a. (equal to the average of past profits) will also grow a rate equal to past
profits growth rate. Love Ltd is an all equity firm. Beautiful Ltd has 50 million ordinary shares.
Required:
a) Compute the cost of equity of Love Ltd.
b) Using the cost of equity computed in (a) above, determine the maximum price with
Love Ltd should pay for each share of Beautiful Ltd to acquire it.
c) What is the significance of valuation of securities.
Date posted: February 12, 2019. Answers (1)
- Swale Ltd. wants to raise Shs. 15,000,000 in additional funds through a rights offering. The
following statements were prepared just before the planned rights offerings:(Solved)
Additional information:
i) The company had a price-earnings ratio of 7.5 at the time of the rights offering. Its
dividend payout ratio is 40%.
i i) The proposed rights offering subscription price per share is Sh.15.
iii) No change is expected in the return on total assets or dividend payout ratio after the
rights offering.
Required:
a) How many rights are required to buy one new share?
b) Calculate the return on total assets.
c) Calculate the following immediately before the rights issue:
- Dividend per share;
- Market price per share.
d) Calculate the dividend per share and market price per share one year after the rights of
offering and state whether you would recommend the rights offering. (Give reasons)
e) Prepare the company's balance sheet immediately after the rights offering under (c)
above.
Date posted: February 12, 2019. Answers (1)
- The Kitale Maize Mills is contemplating the purchase of a new high-speed grinder to replace an
existing one. The existing grinder was purchased two years ago...(Solved)
The Kitale Maize Mills is contemplating the purchase of a new high-speed grinder to replace an
existing one. The existing grinder was purchased two years ago at an installed cost of Sh.300,000.
The grinder was estimated to have an economic life of 5 years but a critical analysis of its
performance now shows it is usable for the next five years with no resale value.
The new grinder would cost Sh.525,000 and require Sh.25,000 in installation costs. It has a five
year usable life. The existing grinder can currently be sold for Sh.350,000 without incurring any
removal costs. To support the increased business resulting from purchase of the new grinder,
accounts receivable would increase by Sh.200,000, inventories by Sh.150,000 and trade creditors
by Sh.290,000. At the end of 5 years the new grinder would be sold to net Sh.145,000 after
removal costs and before taxes. The company provides for 40% taxes on ordinary income. The
estimated profit before depreciation and taxes over the five years for both machines are given as
follows:
The company uses straight line method of depreciation for both machines.
Required:
a) Calculate the initial investment associated with the replacement of the existing grinder
with the new one. Show your full workings.
b) Determine the incremental operating cash flows associated with the proposed grinder
replacement.
c) Calculate the terminal cash flow expected from the proposed grinder replacement.
Date posted: February 12, 2019. Answers (1)
- The most recent financial data for the Rare Watts disclose the following:
Dividend per share Sh.3.00
Expected annual dividend growth rate 6 percent
Current required rate of return...(Solved)
The most recent financial data for the Rare Watts disclose the following:
Dividend per share Sh.3.00
Expected annual dividend growth rate 6 percent
Current required rate of return 15 percent
The company is considering a variety of proposals in order to redirect the
firm‟s activities. The following four alternatives have been suggested:
1. Do nothing in which case the key financial variables will remain unchanged.
2. Invest in venture that will increase the dividend growth rate to 7% and lower
the required rate of return to 14%.
3. Eliminate an unprofitable product line. The action will increase the dividend
growth rate to 8% and raise the required rate of return to 17%.
4. Acquire a subsidiary operation from another company. This action will increase
the dividend growth rate to 9% and required rate of return to 18%.
Required:
For each of the proposed actions, determine the resulting impact price and recommend
the best alternative.
Date posted: February 12, 2019. Answers (1)