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The directors of Critsim Plc have the opportunity to acquire a competitor company for 2 million, which would need to be funded by debt; the
The directors of Critsim Plc have the opportunity to acquire a competitor company for 2 million, which would need to be funded by debt; the bank has agreed to finance this on the same basis as the existing debt. What level of profitability will be required from the ac- quisition to maintain a similar relationship between operating profit and distributable profit?
latest annual report of Critsim Plc. Critsim plc 000's 000's Current assets Non-current assets 615 5,240 Current liabilities Long-term debt Shares Reserves 415 3,500 1,430 510 5,855 5,855 1,210 1,015 195 Revenue Direct Op profit Interest @ 5% Tax @ 20% Distributable 175 4 16 Step by Step Solution
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