Your firm would like to take over a manufacturing entity located in Accra, BigTime Ltd$.$ The target

company$$s financial position as of now is presented in the statement of financial position exhibited below.

Statement of Financial Position on December $31,2023$

GH$$

ASSETS

Current assets

Cash $35,650\mathrm{.}00$

Trade and other receivables $380,020\mathrm{.}00$

Inventories $89,762\mathrm{.}00$

Total current assets $505,432\mathrm{.}00$

Noncurrent assets

Long$-$term investments $20,500\mathrm{.}00$

Property, plant, and equipment $1,889,510\mathrm{.}00$

Total noncurrent assets $1,910,010\mathrm{.}00$

Total assets $2,415,442\mathrm{.}00$

LIABILITIES AND EQUITY

Current liabilities

Bank overdraft $14,350\mathrm{.}00$

Trade payables $480,912\mathrm{.}00$

Interest payable $11,400\mathrm{.}00$

Current tax liability $28,569\mathrm{.}00$

Total current liabilities $535,231\mathrm{.}00$

Noncurrent liabilities

Bank loan $90,000\mathrm{.}00$

Obligations under finance lease $75,865\mathrm{.}00$

Total noncurrent liabilities $165,865\mathrm{.}00$

Total liabilities $701,096\mathrm{.}00$

Equity

Income surplus $123,450\mathrm{.}00$

Share deals $30,116\mathrm{.}00$

Capital surplus $60,780\mathrm{.}00$

Stated capital $1,500,000\mathrm{.}00$

Shareholders$$ fund $1,714,346\mathrm{.}00$

Total liabilities and equity $2,415,442\mathrm{.}00$

Stacy Ltd is registered with $5,000,000$ shares but only $500,000$ shares have been issued and paid up$.$ Your

firm is considering how much to quote in its bid for Stacy Ltd$.$

Required:

$($a$)$ Based on net assets, how much should your firm offer for each share of Stacy Ltd$.$s equity stock?

$($b$)$ Supposing under the acquisition deal, the bank loan and long$-$term investments will not be transferred

to your firm, how much should your firm quote for a share of the target entity$$s equity stock

considering its assets and liabilities?

P a g e $3|8$

$($c$)$ Assume that your firm will not take over the long$-$term investments and bank loan and the following

fair value assessments are done:

$$ Inventories worth GH$9,500$ are obsolete. It is expected that GH$80,000$ will be realised from

the sale of the other inventories.

$$ Uncollectible trade receivables are estimated to be GH$15,000.$

$$ The current value of property, plant, and equipment is GH$2,155,800.$

Determine the value your firm should quote for a share in Stacy Ltd$.$