5 The most recent financial year of Wearmon plc, a publicly traded company, ended on 31 March 2020. On 1 April 2019 the share capital and reserves of Wearmon plc was as follows: Ordinary shares of1 7.5% Redeemable Preference shares of 50 pence Authorised Issued 80,000,000 50,000,000 20,000,000 10,000,000 100,000,000 60,000,000 4,000,000 21,595,000 85,595,000 Share premium Retained profit On 31 November 2019 Wearmon plc made a rights issue of 2 for 5 at an exercise price of 1.90 a share. Just before the rights issue the market value of each ordinary share was 2.15 pershare. The new shares were eligible for all subsequent dividends. The following information comes from Wearmon plc's summarised income statement for the year ended 31 March 2020: Net profit Taxation Net profit after taxation 7,850,000 1,570,000 6,280,000 Wearmon plc paid the following dividends during the year ended 31 March 2020: Preference dividends: - paid (1st six months ofyear ended 31 March 2020) 375,000 -paid (2nd six months year ended 31 March 2020) 375,000 Ordinary dividends: -paid (final for yearended 31 March 2019) 400,000 - paid (interim foryear ended 31 March 2020) 400,000 The market value of each ordinary share in Wearmon plcon 31 March 2020 was 2.32. Required a) Calculate Wearmon plc'sbasicearnings per shareforthe yearended 31 March 2020 in accordance with the provisions of IAS33 Earnings per share. (14 marks) b) Calculate andinterpret Wearmon plc's PE ratio as at 31 March 2020. (6 marks) c) Critically assess the usefulness of published earnings per share figures to investors. (10 marks) d) Discuss the benefits to both shareholders and the company when a company makes a rights issue. Are there any risks? (8 marks) e) Calculate Wearmon plc's market capitalisation as at 31 March 2020 and explainits usefulness tousers of the financial statements. (4 marks) f) i) Prepare the share capitalandreserves section of Wearmon plc's statement of financial position as at 31 March 2020. (9 marks) ii) Calculate and interpret Wearmon plc's capital gearing as at 31 March 2020 including your assessment of the effect of the rights issue on the company's gearing. (5 marks) g) Investor information available online for publicly quoted companies sometimes includes a beta value for the company. Required Explain what a beta value is and how it should be interpreted. (4 marks) Total 60marks 5 The most recent financial year of Wearmon plc, a publicly traded company, ended on 31 March 2020. On 1 April 2019 the share capital and reserves of Wearmon plc was as follows: Ordinary shares of1 7.5% Redeemable Preference shares of 50 pence Authorised Issued 80,000,000 50,000,000 20,000,000 10,000,000 100,000,000 60,000,000 4,000,000 21,595,000 85,595,000 Share premium Retained profit On 31 November 2019 Wearmon plc made a rights issue of 2 for 5 at an exercise price of 1.90 a share. Just before the rights issue the market value of each ordinary share was 2.15 pershare. The new shares were eligible for all subsequent dividends. The following information comes from Wearmon plc's summarised income statement for the year ended 31 March 2020: Net profit Taxation Net profit after taxation 7,850,000 1,570,000 6,280,000 Wearmon plc paid the following dividends during the year ended 31 March 2020: Preference dividends: - paid (1st six months ofyear ended 31 March 2020) 375,000 -paid (2nd six months year ended 31 March 2020) 375,000 Ordinary dividends: -paid (final for yearended 31 March 2019) 400,000 - paid (interim foryear ended 31 March 2020) 400,000 The market value of each ordinary share in Wearmon plcon 31 March 2020 was 2.32. Required a) Calculate Wearmon plc'sbasicearnings per shareforthe yearended 31 March 2020 in accordance with the provisions of IAS33 Earnings per share. (14 marks) b) Calculate andinterpret Wearmon plc's PE ratio as at 31 March 2020. (6 marks) c) Critically assess the usefulness of published earnings per share figures to investors. (10 marks) d) Discuss the benefits to both shareholders and the company when a company makes a rights issue. Are there any risks? (8 marks) e) Calculate Wearmon plc's market capitalisation as at 31 March 2020 and explainits usefulness tousers of the financial statements. (4 marks) f) i) Prepare the share capitalandreserves section of Wearmon plc's statement of financial position as at 31 March 2020. (9 marks) ii) Calculate and interpret Wearmon plc's capital gearing as at 31 March 2020 including your assessment of the effect of the rights issue on the company's gearing. (5 marks) g) Investor information available online for publicly quoted companies sometimes includes a beta value for the company. Required Explain what a beta value is and how it should be interpreted. (4 marks) Total 60marks