Please Help: question
Posted Date : 25-Apr-2013 , 10:05:09 am | Posted By Rinku Gupta
Q3.(i) The capital employed in a business has been finance as below:
Rs.
Equity Share Capital 6,00,000
7% Preference Share Capital 4,00,000
6% Debentures 8,00,000
Reserves & Surplus 2,00,000
The company earns a profit of Rs. 4,00,000 before interest and tax .Test it for Trading on Equity. Tax rate may be taken at 50%.
(ii) Explain the factor influencing capital structure.
Rs.
Equity Share Capital 6,00,000
7% Preference Share Capital 4,00,000
6% Debentures 8,00,000
Reserves & Surplus 2,00,000
The company earns a profit of Rs. 4,00,000 before interest and tax .Test it for Trading on Equity. Tax rate may be taken at 50%.
(ii) Explain the factor influencing capital structure.
Category : Accounts | Answers : 1 | Comments : 0 | Hits : 347
Answers
Answer By: Vikash Kumar Jha
To know the test as trading on equity share for which we have to come profit after intest than deduct tax after this ingnore preference devidend out of this and on balance profit we have to calculate ratio of it whit total amount of share capital. Last one ihave to say factor which affect capital structure are debt and equity in the sense of cost, risk, dilution in control.
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