Find out the new Exchange (Swap) Ratio assuming that 100% weightage is applied on Book Value, Market Value, EPS and Net Profit Ratio. Give your reasoning for changes in Exchange Ratio, if any.

The question asks to find the new Exchange (Swap) Ratio assuming 100% weightage is applied on Book Value, Market Value, EPS, and Net Profit Ratio individually, not combined. This means we calculate the swap ratio based on each parameter as if it were the only parameter. Individual Swap Ratios (100% Weightage): Parameter A Limited (a) B Limited (b) Swap Ratio (c) = (b)/(a) Present share capital of B Ltd. (₹ Lakhs) Shares to be issued by A Limited (Lakhs) Book Value per share (A) 117.00 77.80 1:0.665 20.00 13.30 Market Price (B) 175.00 100.00 1:0.571 20.00 11.42 Earnings Per Share (EPS) (C) 10.40 8.75 1:0.841 20.00 16.82 Net Profit Ratio (D) 26% 27.78% 1:1.068 20.00 21.36 Reasoning for changes in Exchange Ratio: Book Value: The swap ratio based on book value is 0.665. This means for every share of B Limited, 0.665 shares of A Limited would be issued. The book value of B Limited per share (₹77.80) is almost two-thirds of A Limited's (₹117.00), leading to a lower swap ratio. Market Price: The swap ratio based on market price is 0.571. B Limited's market price (₹100) is significantly less than A Limited's (₹175), resulting in a lower swap ratio. This is also influenced by promoter holdings affecting free float. EPS: The swap ratio based on EPS is 0.841. B Limited's EPS (₹8.75) is a higher proportion of A Limited's EPS (₹10.40) compared to their respective market prices or book values, leading to a higher swap ratio. This reflects B Limited's profitability per share relative to A Limited. Net Profit Ratio: The swap ratio based on Net Profit Ratio is 1.068. B Limited has a higher Net Profit Ratio (27.78%) than A Limited (26%). This indicates B Limited is more efficient in converting revenue to profit, leading to a swap ratio greater than 1, meaning B Limited shareholders would receive more than one share of A Limited for each of their shares if only this parameter was considered. This method can be deceiving due to smaller capital base and higher profitability of B Limited.