Hi, The calculation for shareholder's equity for year end in the solution doesn't tally with the shareholder's equity info given in the question, how comes? i.e. 16.2m (at start) + 2.536m (earnings) - 0.350m (dividends) = £18.4m not £16.5m? Is anything else taken into consideration? Cheers!
I think you meant April 2010 Question 5(ii) You're asked to find the shareholder's equity for the 2010 calendar year, but you're getting confused over the 2009 and the 2010 data: Shareholders' equity at the end of 2010 = shareholders' equity at the start of 2010 (16.7m given in the question) + earnings during 2010 (7.55 (EPS) x 330,204 (number of shares)) - dividends paid during 2010 (1.06 (dividend per share) x 330,204 (number of shares)) = 16.7 + 2.493 - 0.350 =18.843
Hi Katherine, Yes, I did mean 2010 - too much coffee this morning! Apologies, maybe I wasn't clear enough - I'm happy with how the answer is calculated just confused as the method didn't seem to tally with the data given in the question but I think I've seen my error, I thought that the dividend payment given was paid in 2009 and we make the assumption that the same would be paid in 2010 but I see that it is the actual amount that would be paid in 2010. Because we don't know the dividend payment made in 2009, that would be the balancing item that gets the equity value from £16.2m to £16.5m. Thanks for getting back to me.
Hi All, I have the same query as the OP here. However, it is unresolved. The dividend payment given in the question (1.06 per share) is indeed paid during 2009. However, if we use the logic used in part ii (given below), the computed Shareholders' equity at end of 2009 does not equal to the one already given in the question. Is something missing? Shareholders' equity at end of year = shareholders' equity at the start + earnings during the year - dividends paid during the year I understand we are not asked to compute shareholders' equity at end of 2009, but want to confirm that there are no other elements impacting this figure. Cheers, Jammy
Hi Jammy Good spot - yes it looks like either there must have been some other cashflow out of the company in 2009 (perhaps they repaid some of their debt for example) or there was an inconsistency in the exam question.
