Question 2 Your firm would like to take over a manufacturing entity located in Accra, Stacy Ltd. The target company's financial position as of now is presented in the statement of financial position exhibited below. Statement of Financial Position on December 31, 2022 GH¢ ASSETS Current assets Cash Trade and other receivables Inventories Total current assets Noncurrent assets Long-term investments Property, plant, and equipment Total noncurrent assets Total assets LIABILITIES AND EQUITY Current liabilities Bank overdraft Trade payables Interest payable Current tax liability Total current liabilities Noncurrent liabilities Bank loan Obligations under finance lease Total noncurrent liabilities Total liabilities Equity Income surplus Share deals Capital surplus Stated capital Shareholders' fund Total liabilities and equity 35,650.00 380,020.00 89,762.00 505,432.00 20,500.00 1,889,510.00 1,910,010.00 2,415.442.00 14,350.00 480,912.00 11,400.00 28,569.00 535,231.00 90,000.00 75,865.00 165,865.00 701,096.00 123,450.00 30,116.00 60,780.00 1,500,000.00 1,714,346.00 2,415,442.00 Stacy Ltd is registered with 5,000,000 shares but only 500,000 shares have been issued and paid up. Your firm is considering how much to quote in its bid for Stacy Ltd. Required: (a) Based on net assets, how much should your firm offer for each share of Stacy Ltd.'s equity stock? (b) Supposing under the acquisition deal, the bank loan and long-term investments will not be transferred to your firm, how much should your firm quote for a share of the target entity's equity stock considering its assets and liabilities?
Question 2 Your firm would like to take over a manufacturing entity located in Accra, Stacy Ltd. The target company's financial position as of now is presented in the statement of financial position exhibited below. Statement of Financial Position on December 31, 2022 GH¢ ASSETS Current assets Cash Trade and other receivables Inventories Total current assets Noncurrent assets Long-term investments Property, plant, and equipment Total noncurrent assets Total assets LIABILITIES AND EQUITY Current liabilities Bank overdraft Trade payables Interest payable Current tax liability Total current liabilities Noncurrent liabilities Bank loan Obligations under finance lease Total noncurrent liabilities Total liabilities Equity Income surplus Share deals Capital surplus Stated capital Shareholders' fund Total liabilities and equity 35,650.00 380,020.00 89,762.00 505,432.00 20,500.00 1,889,510.00 1,910,010.00 2,415.442.00 14,350.00 480,912.00 11,400.00 28,569.00 535,231.00 90,000.00 75,865.00 165,865.00 701,096.00 123,450.00 30,116.00 60,780.00 1,500,000.00 1,714,346.00 2,415,442.00 Stacy Ltd is registered with 5,000,000 shares but only 500,000 shares have been issued and paid up. Your firm is considering how much to quote in its bid for Stacy Ltd. Required: (a) Based on net assets, how much should your firm offer for each share of Stacy Ltd.'s equity stock? (b) Supposing under the acquisition deal, the bank loan and long-term investments will not be transferred to your firm, how much should your firm quote for a share of the target entity's equity stock considering its assets and liabilities?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter8: Investing Activities
Section: Chapter Questions
Problem 15PC
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