Question

In the form of an extra dividend to shareholders or embark on a share repurchase scheme. Current profits are R3.40 per share and their shares currently trade for R35. Their abbreviated balance sheet before paying out the dividend is as follows:

Equity 350 000 Bank/cash 130 000 Debt 120 000 Other assets 340 000 470 000 470 000 Evaluate each alternative(i.e. pay the dividend or repurchase the shares) by:Calculating the number of shares in issue.

Answer 1

Equity 350 000 / R35 = 10 000 shares

Answer: 10 000 shares