Top 2 IAPM Balance Sheet Valuation Of Equity Questions You Need To Solve


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BALANCE SHEET VALUATION ILLUSTRATIONS

 

Illustration 1

 

The Balance Sheet of Ganesh Ltd. as on 31-3-2009 was as under:

 

Liabilities

Assets

2,000 Equity share of 100 eachGeneral Reserve

Profit & Loss A/c

Creditors

Provision for Taxation

Provident Fund

2,00,000

50,000

25,000

45,000

20,000

17,500

Land and BuildingMachinery

Investment at Cost

(Market Value  37,500)

Debtors

Stock

Cash & Bank

1,25,000

75,000

45,000

50,000

37,500

25,000

Total

3,57,500

Total

3,57,500

 

Additional Information:

i)        Land and Building & Machinery are valued at  1,37,500 and  55,000 respectively.

ii)      Of the total debts  2,500 are bad.

iii)    Goodwill is to be valued at  25,500.

iv)    The normal dividend declared and paid by such type of companies is  15% on the paid-up capital.

v)      The average rate of dividend, declared and paid up by the company is 18% on its paid-up capital.

Calculate the fair value of an equity share of the company.

 

 

Illustration 2

Following is the Balance Sheet of Satyam Ltd. for the year ended 31.12.2008:

( in crores)

Liabilities

Assets

Share Capital (@10/- par)Reserves

Secured Loans

Current Liabilities

136

7,222

24

1,441

Fixed AssetsInvestments

Current Assets

883

494

7,446

Total

8,823

Total

8,823

Mr. Raju, the chairman of Satyam Ltd. declared a scam in the company on 1.1.2009. The following were the details:

i)        There was cash which was non-existent cash of  5040 crore.

ii)      Interest not receivable recorded  376 crore.

iii)    Total Liability is understated by  1,230 crore.

iv)    Actual Debtor position of  490 crore as against  651 crore reported in the books.

 

L & T which has a Net asset value of  405.10 per share wants to buy a stake in the company and has asked you to calculate:

(i)     Intrinsic value on 1.1.2009

(ii)   Exchange Ratio


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