In any scheme of compromise and arrangement, merger and amalgamation share exchange ratio is needed to be calculated which requires basic calculation of EBITA, PAT and Super Profit for valuation of shares. From the follo
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2024
In any scheme of compromise and arrangement, merger and amalgamation share exchange ratio is needed to be calculated which requires basic calculation of EBITA, PAT and Super Profit for valuation of shares. From the following information related to Wise Ltd., calculate : (a) EBITA (b) PAT (c) Super profit (Figures are given in lakh) Net tangible assets ₹ 900 Operational Revenue ₹ 2,150 Employment Cost ₹ 340 (including onetime payment of ₹ 40 lakh, not likely to occur in future) Managerial Remunerations ₹ 75 (to be increased by ₹ 20 lakh from next year) Cost of goods sold ₹ 920 Finance charges ₹ 170 Depreciation/Amortization ₹ 70 Tax provision is to be made @ 30%. Expected rate of return on assets is to be assumed 25%.
Answer & Explanation:
(a) Calculation of EBITA (₹ in Lakhs) Operational Revenue: ₹ 2150 Less: Cost of goods sold: ₹ 920 Employment Cost: ₹ 340 Managerial Remuneration: ₹ 75 EBITA: ₹ 815 (b) Calculation of PAT (₹ in lakhs) EBITA: ₹ 815 Less: Finance charges: ₹ 170 Less: Depreciation / Amortization: ₹ 70 PBT: ₹ 575 Less: Taxes @ 30%: ₹ 172.50 PAT: ₹ 402.50 (c) Computation of Super Profit (i) Future Maintainable Profit (₹ in lakhs) PBT: ₹ 575 Add: Employment Cost onetime payment not likely to occur future: ₹ 40 Less: Increase in Managerial Remuneration: ₹ 20 Total: ₹ 595 Less: Taxes @ 30%: ₹ 178.50 Future Maintainable Profit: ₹ 416.50 (ii) Super Profit (₹ in lakhs) Future Maintainable Profit: ₹ 416.50 Less: Expected return on assets (₹ 900 lakhs*25%): ₹ 225 Super Profit: ₹ 191.50
Topics: Valuation
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