Equity – Knowsia

BMIS – L1 – QD15 Rewards – Extrinsic and Intrinsic

Differentiate between extrinsic and intrinsic rewards with examples.

Question

(a). Differentiate between extrinsic and intrinsic rewards including examples of each.

(b). Explain the concept of equity and organisational justice including the four categories of perceptions of fairness in the workplace.

Answer

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Tags: Employee Perceptions, Equity, Fairness, Motivation, Organisational Justice
Level: Level 1

Topic: Motivation

BCL – L1 – Q3 – Maxims of Equity

Identify four maxims of equity that supplement common law for fairness.

Question

Equity is a term which applies to a specific set of legal principles which were developed to supplement the common law and to ensure fairness in the adjudication of matters. Required:

Identify FOUR (4) maxims of equity.

Answer

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Tags: Common Law, Equity, Fairness, Maxims of Equity
Level: Level 1

Topic: Sources of Law

FR – L2 – Q55 – Financial Instruments

Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.

Question

On 1 January Year 1 Jordana PLC has the following capital and reserves.

Equity	GH₵
Share capital (1 million ordinary shares)	1,200,000
Retained earnings	5,670,300
	6,870,300

During Year 1 the following transactions took place.

1 January: An issue of GH₵100,000 8% GH₵1 redeemable preference shares at a premium of 60%. Issue costs are GH₵2,237. Redemption is at 100% premium on 31 December Year 5. The effective rate of interest is 9.5%.
31 March: An issue of 300,000 ordinary shares at a price of GH₵1.30 per share. Issue costs, net of tax benefit, were GH₵20,000.
30 June: A 1 for 4 bonus issue of ordinary shares.
Profit for the year, before accounting for the above, was GH₵508,500. The dividends on the redeemable preference shares have been charged to retained earnings.

Required
Set out capital and reserves and liabilities resulting from the above on 31 December Year 1.

Answer

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Tags: Accounting Standards, Convertible Loan Notes, Corporate Governance, Deferred Tax, Equity, Financial instruments, Financial Statements, Liabilities, Preference Shares, Share Capital
Level: Level 2

Topic: Financial Reporting Standards and Their Applications

FM – L2 – Q127 – Value for Money in Public Financial Management

Explain the concept of value for money in PFM and its elements with illustrations.

Question

(a) Value for money is critical in public financial management (PFM) and therefore every public policy and programme should be subjected to the value for money test.

Required:

(i) What do you understand by value for money in relation to PFM? (2 marks)

(ii) Explain, with illustration, the elements of value for money and their interrelations.

(b) The flagship programme of government is a Free Secondary Education Programme (FSEP) which aims at improving quality and access to secondary education through the removal of cost barriers.

Required:

Discuss steps that should be taken to ensure value for money in the implementation of the FSEP. (10 marks)

Answer

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Tags: Economy, Effectiveness, Efficiency, Equity, Free Education, Public Financial Management, Value for Money
Level: Level 2

Topic: Introduction to financial management

FM – FM – L2 – Q35 – Capital structure

Analyze gearing impact on two companies' EPS and financial risk using provided financial data.

Question

The following information is available about Company A and Company B:

	Company A	Company B
Capital structure	GH¢	GH¢
Equity shares of GH¢1	10,000	10,000
Reserves	20,000	90,000
10% debt capital	30,000	—
	60,000	100,000
	100,000	100,000

| Annual profit | | | | Sales | 80,000 | 80,000 |

| Variable costs | 40,000 | 40,000 |

| Contribution | 40,000 | 40,000 |

| Fixed operating costs | 10,000 | 10,000 |

| Profit before interest and tax | 30,000 | 30,000 |

| Interest costs | 3,000 | — | | Profit | 27,000 | 30,000 |

| Tax (20%) | 5,400 | 6,000 |

| Profit after tax (= earnings after interest and tax) | 21,600 | 24,000 |

Required:

(a) Calculate the earnings per share for Company A and Company B.

(b) Calculate the level of profit before interest and tax at which the earnings per share for Company A will be equal to the earnings per share for Company B.

Answer

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Tags: Capital structure, Debt, Earnings per share, Equity, Financial Risk, Gearing, Profit after tax
Level: Level 2

Topic: Capital structure

FM – L2 – Q32 – Sources of finance

Explain key features and appropriate uses of equity, venture capital, business angels, private equity funds, and bonds as sources of finance.

Question

Explain the key features of the sources of finance listed below. Describe when it might be appropriate to use each of them.

(a) Equity (shares)

(b) Venture capital

(d) Private equity fund

(e) Bonds

Answer

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Tags: Bonds, Business angels, Capital structure, Equity, Financing options, Private equity, Venture capital
Level: Level 2

Topic: Sources of finance: equity

FM – L2 – Q16 – Sources of finance: debt

Calculate value of convertible debentures and warrants for Amoah Plc and Bonsu Plc at expiry for given share prices.

Question

Amoah Plc and Bonsu Plc each have in issue 2,000,000 ordinary shares of GH₵1 nominal value.
Amoah Plc also has GH₵2,500,000 of 12% convertible debentures in issue. Each GH₵100 of bonds is convertible into 20 ordinary shares at any time until the date of expiry of the bonds. If the bonds have not been converted by the expiry date, they will be redeemed at 105.
Bonsu Plc has 500,000 equity warrants in issue. Each warrant gives its holder an option to subscribe for 1 ordinary share at a price of GH₵5.00 per share. The warrants can be exercised at any time until the date of their expiry.
The shares of both companies, the convertible debentures, and the warrants are all actively traded in the stock market.

Required
(a) Calculate the value of each GH₵100 unit of convertible debentures of Amoah Plc and the value of each warrant of Bonsu Plc on the day of expiry, if the share price for each company at that date is:
(i) GH₵4.40
(ii) GH₵5.20
(iii) GH₵6.00
(iv) GH₵6.80

(b) Assume that the profit before interest and tax of both companies is GH₵1,200,000 and the rate of tax is 50%.

Calculate the earnings per share for:

(i) Amoah Plc, assuming that none of the convertible debentures are converted

(ii) Amoah Plc, assuming that all of the convertible debentures are converted

(iii) Bonsu Plc, assuming that none of the warrants are exercised

(iv) Bonsu Plc, assuming that all of the warrants are exercised

Answer

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Tags: Earnings per share, Equity, Financial instruments, onvertible debentures, Profit after tax, Stock market, Warrants
Level: Level 2

Topic: Sources of finance: debt

Tag (SQ): Equity

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BMIS – L1 – QD15 Rewards – Extrinsic and Intrinsic

Differentiate between extrinsic and intrinsic rewards with examples.

BCL – L1 – Q3 – Maxims of Equity

Identify four maxims of equity that supplement common law for fairness.

FR – L2 – Q55 – Financial Instruments

Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.

FM – L2 – Q127 – Value for Money in Public Financial Management

Explain the concept of value for money in PFM and its elements with illustrations.

FM – FM – L2 – Q35 – Capital structure

Analyze gearing impact on two companies' EPS and financial risk using provided financial data.

FM – L2 – Q32 – Sources of finance

Explain key features and appropriate uses of equity, venture capital, business angels, private equity funds, and bonds as sources of finance.

FM – L2 – Q16 – Sources of finance: debt

Calculate value of convertible debentures and warrants for Amoah Plc and Bonsu Plc at expiry for given share prices.

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BMIS – L1 – QD15 Rewards – Extrinsic and Intrinsic

Differentiate between extrinsic and intrinsic rewards with examples.

You're reporting an error for "BMIS – L1 – QD15 Rewards – Extrinsic and Intrinsic"

BCL – L1 – Q3 – Maxims of Equity

Identify four maxims of equity that supplement common law for fairness.

You're reporting an error for "BCL – L1 – Q3 – Maxims of Equity"

FR – L2 – Q55 – Financial Instruments

Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.

You're reporting an error for "FR – L2 – Q55 – Financial Instruments"

FM – L2 – Q127 – Value for Money in Public Financial Management

Explain the concept of value for money in PFM and its elements with illustrations.

You're reporting an error for "FM – L2 – Q127 – Value for Money in Public Financial Management"

FM – FM – L2 – Q35 – Capital structure

Analyze gearing impact on two companies' EPS and financial risk using provided financial data.

You're reporting an error for "FM – FM – L2 – Q35 – Capital structure"

FM – L2 – Q32 – Sources of finance

Explain key features and appropriate uses of equity, venture capital, business angels, private equity funds, and bonds as sources of finance.

You're reporting an error for "FM – L2 – Q32 – Sources of finance"

FM – L2 – Q16 – Sources of finance: debt

Calculate value of convertible debentures and warrants for Amoah Plc and Bonsu Plc at expiry for given share prices.

You're reporting an error for "FM – L2 – Q16 – Sources of finance: debt"

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