Page 26 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Chapter 1

Example 4

A company is considering two funding options for a new project. The new
project may be funded by GBP 10m of equity or debt. Below are the forecast
financial statements reflecting both methods of funding.

Statement of financial position extract
Equity Debt
GBP m GBP m
Long term liabilities (10% bonds) 0.0 10.0
Capital
Share capital (GBP0.50) 11.0 3.5
Share premium 4.0 1.5
Reserves 5.0 5.0
–––– ––––
20.0 20.0
–––– ––––

Statement of profit or loss extract
GBP m
Revenue 100.0
Gross profit 20.0
Other expenses (excl. finance charges) (15.0)
––––
Operating profit 5.0
––––

Corporation tax is charged at 30%.

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