cameroon gce A level 2024 commerce and finance 3
cameroon gce A level 2024 commerce and finance 3
CAPITAL STRUCTURE
1. A firm’s capital structure is made up of debt and equity capital. The particular source of the firm s finance
must match with its objectives. The source may be internal or external depending on the risk and cost
involved.
The CEO of Jerry Pic generated CFAF 42 million as capital in the year 2021 to finance the expansion of his
business activities by using the following securities:
1,000, 8% cumulative preference shares at CFA F 10,000 each;
400 ordinary shares of CFAF 50,000; each
140, 7% debentures of CFAF 50,000; each
250, 10% non–cumulative preference shares of CFAF 20,000 each.
The company realized a profit of CFA F 1,950,000 for the year 2021.
Required:
a) State three sources of equity and debt capital each that might have been used by the CEO of Jerry Pic.
c) State three sources each of internal and external capital that can
| be used in raising capital by the CEO | of Jerry Pic not mentioned in the passage. d) Examine four factors that the CEO of Jerry Pic may risks and cost of capital. |
| consider when choosing a source other than the |
e) Determine the gearing ratio of Jerry Pic
0 Discuss three reasons why the CEO of Jerry Pic. may prefer to have more equity capital in its structure.
(6 marks)
(Total 20 marks)
Sango and Bros decided to dissolve the partnership and the profit/losses were shared in proportion to their
capital contributions. Prior to dissolution, Mola has been the managing partner.
Required:
a) Suggest three possible reasons for the dissolution of Sango and Bros
b) Determine and distribute the net asset/loss to the partners.
(3 marks)
(5 marks)
c) Examine three ways Sango Ltd will be different from Sango Pic (6 marks)
(6 marks)
(Total 20 marks)
d) Describe the type of partners in Sango & Bros and the nature of the partnership
