Model: Intrinsic value of shares The following are the balance sheets of AB Ltd. & CD Ltd. as on 31 March 2011:
Balance Sheet of AB Ltd.
|
Liabilities |
Assets |
||
|
Share Capital: |
Fixed Assets |
14,00,000 |
|
|
8,000 Shares of Z100 Each |
8,00,000 |
Investments |
10,00,000 |
|
General Reserve |
10,00,000 |
Current Assets |
12,00,000 |
|
Profit & Loss Account |
6,00,000 |
||
|
Debentures |
7,00,000 |
||
|
Current Liabilities |
5,00,000 |
||
|
36,00,000 |
36,00,000 |
Balance Sheet of CD Ltd.
|
Liabilities |
Assets |
||
|
Share Capital: |
|||
|
3,600 Shares of Rs.100 Each |
3,60,000 |
Fixed Assets |
6,00,000 |
|
General Reserve |
2,00,000 |
Current Assets |
4,00,000 |
|
Profit & Loss Account |
1,60,000 |
||
|
Current Liabilities |
|||
|
Creditors |
2,00,000 |
||
|
Bills Payable |
80,000 |
||
|
10,00,000 |
10,00,000 |
AB Ltd. agrees to take over CD Ltd. Find out the ratio of exchange of shares on the basis of book value.