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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
10 months ago
Option D could work too, but not my first choice.
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Albina
10 months ago
$36 million? Seems a bit low for a takeover.
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Pilar
11 months ago
Agree with A, fits the industry averages.
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Shenika
11 months ago
I think option C is way too high!
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Florinda
11 months ago
Based on the P/E multiples, option A seems reasonable.
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Reta
11 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
11 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
11 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
11 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
11 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
11 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
11 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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