b. The following is the summarized statement of financial position of Bilton Ltd as at 31st March 2017 Sh 'm' Fixed Assets Land and buildings 60 Furniture and fittings 8 Current Assets Stock 35 Prepaid expenses 5 Debtors 30 Cash in hand 10 148 Financed by: Capital Ordinary share of sh.10 each 60 Retained earnings 10 Long term liability: Long term debt 18 Current liabilities: Creditors 40 Accruals 20 148 Additional information 1. In the past Bilton Lid's earnings per share (EPS) averaged sh.6 and the dividend payout rate was 50% or sh.3 per share. For the year ended 31" March 2017. the EPS declined to sh.2.50. Since this decline was felt to be temporary, the annual dividend of sh.3 per share was maintained for the financial year ended 31" March 2017. This also applies for the first six months of the financial year ending 31" March 2018, 2. Recent projections however have caused management to revise downwards the expected EPS for the financial year ending 31" March 2018. The forecast of EPS has been reduced to sh.2 per share and for the financial year ending 315 March 2019, adjusted to sh.2.20 3. Bilton Ltd's ordinary shares are currently selling in the market at sh.15 per share. The management of Bilton Ltd is considering whether or not to retain the cash dividend of sh.3 per share for the next two financial years. The management is also considering to make a bonus issue in place of cash dividend. equired: Calculations to help determine whether it will be feasible to maintain dividends at sh.3 per share for the next two financial years. 3 marks ii. Determine whether the company should replace the cash dividend with bonus issue of one share for every four ordinary shares. 4 marks Explain the course of action that the management of Bilton Ltd should take in the light of the declining projections in dividend payouts. 4 marks 111. b. The following is the summarized statement of financial position of Bilton Ltd as at 31st March 2017 Sh 'm' Fixed Assets Land and buildings 60 Furniture and fittings 8 Current Assets Stock 35 Prepaid expenses 5 Debtors 30 Cash in hand 10 148 Financed by: Capital Ordinary share of sh.10 each 60 Retained earnings 10 Long term liability: Long term debt 18 Current liabilities: Creditors 40 Accruals 20 148 Additional information 1. In the past Bilton Lid's earnings per share (EPS) averaged sh.6 and the dividend payout rate was 50% or sh.3 per share. For the year ended 31" March 2017. the EPS declined to sh.2.50. Since this decline was felt to be temporary, the annual dividend of sh.3 per share was maintained for the financial year ended 31" March 2017. This also applies for the first six months of the financial year ending 31" March 2018, 2. Recent projections however have caused management to revise downwards the expected EPS for the financial year ending 31" March 2018. The forecast of EPS has been reduced to sh.2 per share and for the financial year ending 315 March 2019, adjusted to sh.2.20 3. Bilton Ltd's ordinary shares are currently selling in the market at sh.15 per share. The management of Bilton Ltd is considering whether or not to retain the cash dividend of sh.3 per share for the next two financial years. The management is also considering to make a bonus issue in place of cash dividend. equired: Calculations to help determine whether it will be feasible to maintain dividends at sh.3 per share for the next two financial years. 3 marks ii. Determine whether the company should replace the cash dividend with bonus issue of one share for every four ordinary shares. 4 marks Explain the course of action that the management of Bilton Ltd should take in the light of the declining projections in dividend payouts. 4 marks 111