The Capital structure of Sangam Ltd. is given below : Particulars ₹ (Crore) Share Capital (divided in shares of 10/- each) 5,000 Secured Loans 4,000 Unsecured Loans 2,500 In the next year the company is undertaking an ex

CS Executive · Corporate Accounting and Financial Management · PYQS · December 2024
The Capital structure of Sangam Ltd. is given below : Particulars ₹ (Crore) Share Capital (divided in shares of 10/- each) 5,000 Secured Loans 4,000 Unsecured Loans 2,500 In the next year the company is undertaking an expansion project of ₹1,500/- crore. The project is to be financed in the ratio of 40% infusion of fresh owner capital and 60% secured debt capital. No old debt is repaid during the year. The equity capital will be raised at ₹15/- per share. The average interest rate of the debt (old + new) will be 13%. The income tax rate is 25%. Prepare a statement showing forecast cash flow from financing activities.

Answer & Explanation:

Cash flow from Financing Activities Particulars Amount in ₹ Crore Amount in ₹ Crore Share Capital raised 400 Share Premium 200 600 New Secured Debt raised 900 Debt interest -962 Cash inflow from financing activities 538 Working Notes: Breakup of Capital ₹1500 crore Total Finance required for expansion project Equity Capital 40% ₹600 crore Debt Capital 60% ₹900 crore Amount in ₹ Crore Secured Loans 4000 Unsecured Loans 2500 Amount raised from secured debt capital for new project 900 Total debt capital 7400 Interest Cost @13% 962

Topics: Financial Management

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic