Page 20 - CIMA SCS Workbook November 2018 - Day 1 Suggested Solutions

CIMA NOVEMBER 2018 – STRATEGIC CASE STUDY

EXERCISE 3

Workings - Novak

All in C$m 2017 2016
Gearing D / E 32,000 / 68,263 46.9% 37,000 / 65,129 56.9%
D / (D+E) 32,000 / (32,000 + 31.9% 37,000 / (37,000 + 36.2%
68,263) 65,129)
Interest Operating 17,683 / 1,624 10.9 times 21,359 / 1,766 12.1 times
cover profit /
Finance
expenses
Interest (Finance (1,624 / 32,000) x 5.1% (1,766 / 37,000) x 4.8%
rate expenses / 100% 100%
(approx.) Year end
borrowings
balance) x
100%
Dividend Profit for 10,117 / 9,000 1.1 times No information
cover the year /
Dividend

Workings - PosterRend

All in C$m 2017 2016
Gearing D / E 30,000 / 90,084 33.3% 25,000 / 83,232 30.0%
D / (D+E) 30,000 / (30,000 + 25.0% 25,000 / (25,000 + 23.1%
90,084) 83,232)
Interest Operating 19,176 / 1,500 12.8 times 18,955 / 1,250 15.2 times
cover profit /
Finance
expenses
Interest (Finance (1,500 / 30,000) x 5.0% (1,250 / 25,000) x 5.0%
rate expenses / 100% 100%
(approx.) Year end
borrowings
balance) x
100%
Dividend Profit for 11,666 / 8,000 1.5 times No information
cover the year /
Dividend

60 KAPLAN PUBLISHING