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CIMAPRA19-F03-1 Exam - Topic 1 Question 43 Discussion

The Board of Directors of a listed company wish to estimate a reasonable valuation of the entire share capital of the company in the event of a takeover bid.The company's current profit before taxation is $4.0 million.The rate of corporate tax is 25%.The averageP/Emultiple of listed companies in the same industry is 8 times current earnings.TheP/E multiple of recent takeovers in the same industry have ranged from 9 times to 10 times current earnings.The averageP/Emultiple of the top 100 companies on the stock market is 15 times current earnings.Advise the Board of Directors which of the following is a reasonable estimate of a range of values of the entire share capital in the event of a bid being made for thewhole company?
B) Minimum = $27 million, and maximum = $30 million.
A) Minimum = $36 million, and maximum = $40 million.
C) Minimum = $32 million, and maximum = $60 million.
D) Minimum = $24 million, and maximum = $45 million.

CIMAPRA19-F03-1 Exam - Topic 1 Question 43 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 43
Topic #: 1
[All CIMAPRA19-F03-1 Questions]

The Board of Directors of a listed company wish to estimate a reasonable valuation of the entire share capital of the company in the event of a takeover bid.

The company's current profit before taxation is $4.0 million.

The rate of corporate tax is 25%.

The averageP/Emultiple of listed companies in the same industry is 8 times current earnings.

TheP/E multiple of recent takeovers in the same industry have ranged from 9 times to 10 times current earnings.

The averageP/Emultiple of the top 100 companies on the stock market is 15 times current earnings.

Advise the Board of Directors which of the following is a reasonable estimate of a range of values of the entire share capital in the event of a bid being made for thewhole company?

Show Suggested Answer Hide Answer
Suggested Answer: B

by Avery at May 03, 2022, 07:53 AM

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Lezlie
8 months ago
Option D could work too, but not my first choice.
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Albina
9 months ago
$36 million? Seems a bit low for a takeover.
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Pilar
9 months ago
Agree with A, fits the industry averages.
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Shenika
9 months ago
I think option C is way too high!
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Florinda
9 months ago
Based on the P/E multiples, option A seems reasonable.
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Reta
9 months ago
I'm pretty confident about this one. Composer is used to manage the Synergy compute modules and the Virtual Connect modules, so those would be my two selections.
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Kenneth
9 months ago
I'm a bit unsure about some of these options. I'll need to review my notes on software architecture documentation to make sure I choose the right three.
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Annabelle
9 months ago
The contingency plan could work, but I'm not sure if that's specifically focused on monitoring and triggers. The continuity of operations plan might also be a possibility, but I'm not as familiar with the details of that one.
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Nelida
9 months ago
I'm pretty sure the answer is D. Creating a Change is the most common way to facilitate the remediation of a Vulnerable Item.
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Jimmie
9 months ago
C looks tempting, but it sounds too absolute. The 75% maximum seems like an overgeneralization. A mentions concrete health changes that actually impact fitness testing.
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Deeann
10 months ago
I practiced a question like this, and if I recall correctly, the workflows also need to reflect the new name, right?
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Maurine
10 months ago
Hmm, I'm a bit confused by the terminology here. I'll need to review my notes on Cisco ACI Multi-Pod environments to make sure I understand the concepts.
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