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This is a case study question is grace ltd is a company manufacturing textile . it has a share capital of 60 lakhs the earning per in the previous year was Rs 0.50 for diversification the company requires additional capital of Rs 40lakhs the company raised funds by issuing 10% debenture for the same .during the current year the company earned profit of Rs 8lakhs on capital employed it paid tax @ 40% face value per share is Rs 10
a] state whether shareholders gained or lost in respect of earning per share on diversification . show your calculations clearly.
b] also state any three factors that favor the issue of debentures by the company as a part of its capital structure. 6 marks
Posted by Jagath Vinod 8 years ago
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