28. 6 points Q.4. A financial consultant has been asked by his client for advice on the relative performance of two companies, Dunedin Ltd and Wellington Ltd. Extracts from the financial statements for the year ended 31 December 2011 and statements of Financial Position at that date of the two companies are as follows, calculate the following and give the appropriate comment: The market values of the ordinary shares at 31 December 2011 were as follows: Dunedin Ltd $2.70 Wellington Ltd $3.60.(ordinary shares) Required: Calculate - a. Gearing b. Dividend cover c. Dividend yield Extract for Financial Statement (income statement) for the year ended 31 December 2011 (60) Dunedin Ltd Wellington Ltd S000 $000 Operating profit (profit from operation) 300 420 Debenture interest (60) (120) 240 300 Transfer to General reserve (100) (50) Preference dividend paid (6) Ordinary dividend paid (90) (150) Retained earnings 44 40 Statement of Financial position extracts at 31 December 2011 Dunedin Ltd Wellington Ltd S000 S000 Long-term liabilities Long-term liabilities 10% debentures 2014/15 600 10% debentures 2014/15 1000 Ordinary shares of $1 200 Ordinary shares of $2 1500 (200 000 shares) (750 000 shares) 6% preference shares of $1 100 6% preference shares of 750 $1 General reserve 120 General reserve 200 Retained profit 80 Retained profit 350 500 2 800