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NAME:
COURSE:
AFFLIATE NUMBER:
DATE:

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1a) Estimate ABEX Total operating income for 1990.
Operating income = $605+301=906 (Dean concludes that it would remain similar as for the year
1990.)
1b) Additional Information to give reasonable Earnings Per share.
To determine a reasonable basic E.P.S we require:
>Number of shares outstanding
>Earnings.
Primary source include: Number of shareholders, shares outstanding, price of each share
1c) Changes and incremental E.P.S.
i)
Solution
For price:
8% of 0.470
=0.5076
8% 0f 19,800
19,800+1,584
= 21,384
Increase in price of polythene increases the value of each share of the shareholder

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NAME: COURSE: AFFLIATE NUMBER: DATE: 1a) Estimate ABEX Total operating income for 1990. Operating income = $605+301=906 (Dean concludes that it would remain similar as for the year 1990.) 1b) Additional Information to give reasonable Earnings Per share. To determine a reasonable basic E.P.S we require: >Number of shares outstanding >Earnings. Primary source include: Number of shareholders, shares outstanding, price of each share 1c) Changes and incremental E.P.S. i) Solution For price: 8% of 0.470 =0.5076 8% 0f 19,800 19,800+1,584 = 21,384 Increase in price of polythene increases the value of each share of the shareholder Question 2 2a) Any company that applies the First-In –First-Out method of inventory evaluation is likely to affect the profitability ratios of the firm. For example, in the scenario above, the use of FIFO method increases the profit margin in table 1 – 4.It has reduced the Cost of Goods sold which has led to increase in the operating margin. 2b) ABEX can look to adopt this LIFO method in the year 1991. This is because; the firm will obtain lower profits therefore not paying a large amount of tax. To my opinion however, ABEX should not look into adopting the LIFO method of inventory evaluation .This is because , LIFO is operating margin will automatically be lower during inflation. Question 3. 3a The correlation co-efficient is down on the graph = 87.5 3b Diversification can be of great importance or can turn out to a huge disadvantage for ABEX C ...
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