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Q1. R Ltd. has surplus cash of $100 Million and wants to distribute 27% of it to the shareholders. The company decides to buy back shares. The Finance Manager of the company estimates that its share price after re-purchase is likely to be 10% above the buyback price-if the buyback route is taken. The number of shares outstanding at present is 10 million and the current EPS is $ 3.

You are required to determine:

(i) The price at which the shares can be re-purchased, if the market capitalization of the company should be $ 210 Million after buyback,

(ii) The number of shares that can be re-purchased, and

(iii) The impact of share re-purchase on the EPS, assuming that net income is the same

Answer all the MCQ in proper sequence in reference to managerial accounts:

2. Bookkeeping Ratios are significant devices utilized by

(a) Managers,

(b) Researchers,

(c) Investors,

(d) All of the above mentioned

3. Net Profit Ratio Signifies:

(a) Operational Profitability,

(b) Liquidity Position,

(c) Big-term Solvency,

(d) Profit for Lenders.

4. Working Capital Turnover quantifies the relationship of Working Capital with:

(a) Fixed Assets,

(b) Sales,

(c) Purchases,

(d) Stock.

5. In Ratio Analysis, the term Capital Employed alludes to:

(a) Equity Share Capital,

(b) Net worth,

(c) Shareholders' Funds,

(d) None of the abovementioned.

6. Profit Payout Ratio is:

(a) PAT Capital,

(b) DPS EPS

(c) Pref. Profit PAT,

(d) Pref. Profit Equity Dividend.

7. DU PONT Analysis manages:

(a) Analysis of Current Assets,

(b) Analysis of Profit,

(c) Capital Budgeting,

(d) Analysis of Fixed Assets.

8. In Net Profit Ratio, the denominator is:

(a) Net Purchases,

(b) Net Sales,

(c) Credit Sales,

(d) Cost of products sold.

9. Stock Turnover quantifies the relationship of stock with:

(a) Average Sales,

(b) Cost of Goods Sold,

(c) Total Purchases,

(d) Total Assets.

10. The term 'EVA' is utilized for:

(a) Extra Value Analysis,

(b) Economic Value Added,

(c) Expected Value Analysis,

(d) Engineering Value Analysis.

11. Profit from Investment might be improved by:

(a) Increasing Turnover,

(b) Reducing Expenses,

(c) Increasing Capital Utilization,

(d) All of the abovementioned.

12. In Current Ratio, Current Assets are contrasted and:

(a) Current Profit,

(b) Current Liabilities,

(c) Fixed Assets,

(d) Equity Share Capital.

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