Equity in limited companies

Question 1

What is one disadvantage to offering shares to public

Answer 1

Lots of scrutiy on their managment of business
e.g What are they doing to improve

Question 2

When do Plc need to submit their accounts within of year ending

Answer 2

6 months

Question 3

When do LTDs need to submit their accounts within of year ending

Answer 3

9 months

Question 4

What is the minium of share capital needed for PLCs

Answer 4

50,000

Question 5

How many directors do PLCs need at least?

Answer 5

2

Question 6

Advantages of being Plcs

Answer 6

easier to get capital
easier to make acquisitions
more of a prestigious profile
Market capitalisations

Question 7

What is the equity in LImited companies

Answer 7

• Ordinary share capital
• share premium
• retained earnings
• general capital reserves

Question 8

What is ordinary share capital?

Answer 8

Capital invested in a company by owners
comes with voting rights over business

Question 9

What is share premium accounts

Answer 9

When companies can sell shares for higher price than nominal (face value) - profits are in this account

Question 10

What are retained earnings?

Answer 10

Amout of a business’s net income that is kept within accounts, rather than paid to share holders
Can be used for dividend payments

Question 11

How to calculate retained earnings?

Answer 11

Balence at beginning of year+ profit of year - dividen payment to shareholders

Question 12

What is general capital reserves?

Answer 12

They can put retained earnings into this account meaning these reserves cant be used to pay dividends - used for further investment of growth

Question 13

What equity can be withdrawn?

Answer 13

Only revenue reserved

Question 14

What are the sources of long term finance?

Answer 14

Share issue (bonus and rights)
Retained earnings
Long term borrowings

Question 15

How can a company issue more shares to exisiting shareholders?

Answer 15

• Bonus issue
• Rights issue

Question 16

What is the bonus issue of more shares?

Answer 16

Given an extra share for free
e.g 1 in 4 bonus issue (FREE)

Question 17

What is the rights issue of more shares?

Answer 17

Give existing shareholders the right to buy more shares at lower price than market value

Question 18

What are the two types of narrative reporting?

Answer 18

• Directors report
• Strategic report

Question 19

What is the directors report of narrative reporting

Answer 19

• Name of directors
• Dividens
• Employees
• Important events in compnay
• Likely future of business
• Research and development activities

Question 20

What is narrative reporting

Answer 20

Backward looking, taking accounability
information included at the front end of an annual report and accounts
ESG Environmental, Social, and Governance)

Question 21

What is strategic reporting in narrative report

Answer 21

• Future developments
• Strategic management (how entity wants to generate and preserve value)
• Business environment - internal and external (trends, risks, employees, human rights)
• Business performance - developemt in year (anaylsis, key performance indicators, gender diversity)