Research Analyst – Feel Real Exam – 7

PESTLE Analysis. PESTLE (Political, Economic, Socio-cultural, Technological, Legal, and Environmental) analysis is done from the perspective of a business looking to set up a unit offshore and analyzing several countries to choose from.

The buyer's bargaining power is high when all the mentioned factors are present: strong competitive intensity, availability of close substitutes, and standardized products with little differentiation.

False. Stock dividend, also known as Bonus shares, refers to the additional free shares given to shareholders in proportion to their holdings, and it is not a dividend payment.

As per SEBI regulations, a deemed connected person includes all of the mentioned entities: a holding/subsidiary company, a company under the same management, and a company under the same group.

To calculate the Equity Capital, we can rearrange the Return on Equity (ROE) formula:

ROE = Net Profit / Equity Capital

Rearranging the formula:

Equity Capital = Net Profit / ROE

Substituting the values:

Equity Capital = Rs 750,000 * 0.20 / 0.30

Equity Capital = Rs 500,000

Therefore, the Equity Capital is Rs 500,000 based on the given information.

Inventory Turnover ratio gives the number of times inventory is rolled over by a company. The Current ratio measures the ability of the company to meet its short-term liabilities.

Yes, he can buy this stock but after 30 days from the preparation of such a report. As per SEBI (Prohibition of Insider Trading) Regulations, 2015: Analysts employed with the organization/firm while preparing research reports of client company(s) shall disclose their shareholdings/interest in such company(s) to the Compliance Officer, and the Analysts who prepare research reports of listed company shall not trade in securities of that company for thirty days from the preparation of such report.

Price of the share will rise in the future due to some random events on the basis of what happened in the past or making trends when there exists none. This is an example of the Gambler’s fallacy bias.

Investors who own property can indeed earn rental income from the property and also earn returns on the capital invested. This is because they receive rental income in addition to any capital appreciation or dividends received from their investment. Therefore, the statement is true.

False. Microeconomics focuses on individual households and firms rather than the aggregate aspects of the economy. It analyzes the behavior of consumers and producers, market interactions, and resource allocation at a micro-level. Macroeconomics, on the other hand, examines the overall economy and factors affecting aggregate supply and demand, such as GDP, unemployment, and inflation.

the Profit and Loss Statement. This financial statement summarizes the revenues earned and costs/expenses incurred by a company over a specific period of time, typically a year. It provides insights into the profitability and financial performance of the business.

Financing Cash Flows. This section of the Cash Flow statement provides information about the funds a company borrowed during the preceding year. It includes cash inflows from borrowing and cash outflows from repaying debt or issuing equity. This section gives insights into the company's financing activities and its sources of external funding.

A key parameter while analyzing this sector is Average Revenue Per Unit (ARPU). It is calculated by total revenue divided by the number of subscribers, and the higher it is, the better for the company. It must be noted that India has among the lowest ARPUs in the world.

The dividend per share can be calculated by multiplying the earnings per share (EPS) by the dividend payout ratio.

Given the information provided:
Market Price = Rs 40.50
PE ratio = 13.50
Dividend payout ratio = 70%

First, let's calculate the EPS:
EPS = Market Price / PE ratio
EPS = 40.50 / 13.50
EPS = 3

Next, we can calculate the dividend per share:
Dividend Per Share = Dividend Payout Ratio * EPS
Dividend Per Share = 70% * 3
Dividend Per Share = Rs 2.10

Therefore, the dividend per share is Rs 2.10.

All of the above s are considered economic factors in PESTLE analysis. Monetary policies of the RBI, country's dependence on other nations for essential natural resources, and forex reserves are key economic aspects that influence the business environment and have an impact on organizations' operations, growth, and sustainability.

Cost of goods sold is included in the Income Statement as it represents the cost of producing goods.

It requires the combination of knowledge, experience, and professional judgment to arrive at a fair valuation of any asset.

Both 2 and 3 are not components of the Current Account of a country. The Current Account includes revenue from imports and exports, but not capital flows like FII or FDI.

In SCP analysis, industry structure refers to all of the mentioned factors. It includes the market size, the growth rate of the industry, and the relationships among the players in the industry. SCP analysis aims to understand the competitive dynamics and market structure within an industry to analyze its performance and behavior.

Beta calculations factor in market risks, as it measures the sensitivity of a stock's performance to overall market performance.

The trades executed on the exchange are settled through the Clearing Corporation, which acts as a counterparty and guarantees the settlement of the trades to both buyers and sellers. The clearing corporation gives a settlement guarantee of trades to the counterparties (all buyers and sellers).

Given that the Quick Ratio is 1 and the total current assets are Rs 80,000, we can indeed calculate the approximate value of the inventory.

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

Substituting the values:

1 = (80,000 - Inventory) / Current Liabilities

Since the Quick Ratio formula measures the company's ability to cover its current liabilities with its most liquid assets (excluding inventory), a Quick Ratio of 1 implies that the company has just enough liquid assets to cover its current liabilities.

Therefore, the approximate value of the inventory would be Rs 40,000 (Rs 80,000 - Rs 40,000 = Rs 40,000), assuming the remaining assets besides inventory are sufficient to cover the current liabilities.

To clarify, the Debt to Equity ratio of 1.5:1 means that for every 1.5 units of debt, there is 1 unit of equity. Given that the total size of the balance sheet is Rs 50 lakhs, we can calculate the equity component using the following steps:

1. Determine the total units in the ratio: 1.5 + 1 = 2.5
2. Divide the total size of the balance sheet by the total units: Rs 50 lakhs / 2.5 = Rs 20 lakhs

Therefore, the equity component of the balance sheet is Rs 20 lakhs.

A Support level in Technical Analysis is a level where the price tends to find support as it is going down.

Yes, it is compulsory for a company listed on stock exchanges to have a Compliance Officer to ensure compliance with applicable laws, regulations, and exchange requirements.

As per Regulation 16 of the Code of Conduct for Research Analysts, research analysts should not deal or trade in recommended securities 30 days before the publication of a research report.

Macroeconomic models are used to analyze and understand the overall functioning and performance of an economy, helping in formulating policies for economic growth and stability.

Correct and detailed management views can be obtained only through personal interactions. These views are generally not available elsewhere.

False. The Code of Conduct is defined in the Schedule III of Research Analyst Regulations.

Highest. Symbols such as AAA, A1 indicate the highest degree of creditworthiness according to the standardized system by SEBI for credit rating agencies.

All of the mentioned factors are advantages of merger and acquisition (M& activities. Diversification can be achieved through acquiring companies in different industries or geographic locations. Synergy refers to the combined efficiency and increased value that can be achieved through M&A. Taxation benefits can arise from utilizing tax shields or taking advantage of favorable tax regulations. Therefore, all of the mentioned factors contribute to the advantage of M&A activity.

The Department of Financial Services administers policies relating to pension reforms, life and general insurance, public sector banks, and other financial services.

True. Pricing power is a function of industry dynamics, elasticity of demand, branding, and customer loyalty. Nescafe, being a strong brand with a loyal customer base, has the ability to increase prices without a significant decline in volumes. This demonstrates pricing power in action.

Let's assume the Sales = 100. As sales are double (200%) of EBIT, EBIT will be half of sales. So the EBIT is 50 (Half of 100).

Now, to calculate the Net Profit, we need to multiply the EBIT by the Net Profit margin. The Net Profit margin is given as 30%, so the Net Profit will be:

Net Profit = EBIT * Net Profit margin
= 50 * 0.30
= 15

Now, we need to calculate the EBIT as a percentage of Net Profit. This can be done by dividing the EBIT by the Net Profit and multiplying by 100:

EBIT % of Net Profit = (EBIT / Net Profit) * 100
= (50 / 15) * 100
= 333.33%

Therefore, the correct calculation for the EBIT % of Net Profit is 333.33%, not 166.66%.

Credit Risk refers to the possibility of a company being unable to meet its debt obligations, including interest payments and principal repayment.

To calculate the approximate market size of the industry, we can use the information provided:

- Total revenue of the four major companies: Rs. 2100 crores
- Market share controlled by the four major companies: 70%

To find the total market size, we divide the total revenue by the market share percentage:

Market Size = Total Revenue / Market Share
Market Size = Rs. 2100 crores / 0.7
Market Size ≈ Rs. 3000 crores

Therefore, the approximate market size of this industry is Rs. 3000 crores.

Puttable bonds provide the investor with the right to sell back the bonds to the issuer before maturity. In a rising interest rate scenario, investors can take advantage of this and protect their investments.

he dividend yield is calculated by dividing the dividend received by the amount invested and then multiplying by 100 to express it as a percentage.

In this case:
Dividend received = Rs 5 x 500 = Rs 2,500
Amount invested = Rs 10,000

Dividend Yield = (Dividend received / Amount invested) x 100
Dividend Yield = (Rs 2,500 / Rs 10,000) x 100
Dividend Yield = 0.25 x 100
Dividend Yield = 25%

Therefore, the dividend yield in this case is 25%. It indicates that the investor has received a return of 25% on their investment in the form of dividends.

The analyst's opinion is likely to be included in all of the mentioned sections of a research report. The valuation section provides the analyst's opinion on the value of the company or its stock. The industry analysis section includes the analyst's opinion on the industry's prospects. The financial forecasting section involves the analyst's opinion on future financial performance. The research report combines various sections that reflect the analyst's opinions and analysis.

When an economy is going through tough times, fewer jobs are created, and so the unemployment rate rises.

Capital Employed can be calculated using the formula: Capital Employed = Total Equity + Total Debt. In this case, the given values are Total Equity = Rs 700,000 and Total Debt = Rs 400,000.

Capital Employed = Total Equity + Total Debt
= Rs 700,000 + Rs 400,000
= Rs 1,100,000

Therefore, the correct calculation for the Capital Employed is indeed Rs 1,100,000. This represents the total funds employed by the company through its equity and debt sources.

Depreciation and Amortization are included in the Income Statement as they represent expenses of the company.

The bias described here is known as "Herd Mentality." In this bias, investors tend to look for evidence of other investors buying specific securities. They believe that others may have better information, which leads to a herd-like behavior of following the investment choices made by others. This behavior can often be driven by uncertainty and a desire to conform to perceived market trends.

The Price to Earnings Ratio (PEG) is a valuation ratio that relates a company's price-to-earnings (PE) ratio to its growth rate. It is used to assess the relative value of a stock considering both its earnings and expected growth.

To calculate the PEG ratio, we divide the PE ratio by the growth rate. In this case, the given PE ratio is 25 and the potential growth rate of the company is 20% for the next few years.

PEG ratio = PE ratio / Growth rate
= 25 / 20
= 1.25

Therefore, the PEG ratio for the company is 1.25. This indicates that the company's stock price is relatively valued considering its earnings and growth rate.

True. Disclosing the allocation of money raised from investors in an Initial Public Offering (IPO) or Follow-on Public Offering (FPO) is one of the responsibilities of the Compliance Officer. The Compliance Officer ensures that the company complies with relevant regulations and guidelines, including disclosing financial information and maintaining transparency in the allocation of funds.

Management views on opportunities and challenges. While historical data, financial data, and the business model can be obtained through various sources and research methods, management views on opportunities and challenges are often subjective and not easily accessible. These views are typically obtained through personal interactions, such as interviews or meetings with the management team.

Acquisition or takeover. In an acquisition or takeover, the acquiring company purchases all or a significant portion of the target company's stock. After the acquisition, both entities usually continue to exist, with the acquiring company gaining control over the operations and assets of the target company. This allows for integration and synergy between the two entities.

In Bonds, the investor knows the amount of interest, etc., he will receive and when. But in Equity, the returns in the form of dividends and capital appreciation are uncertain.

calculation for the Equity to Asset Ratio in this case is:

Equity = Total Assets - Total Liabilities
Equity = Rs 20,000 - Rs 8,000
Equity = Rs 12,000

Equity to Asset Ratio = Equity / Assets
Equity to Asset Ratio = Rs 12,000 / Rs 20,000
Equity to Asset Ratio = 0.6

False. The certificate of registration granted to a Research Analyst under regulation 9 is valid until it is suspended or canceled by the relevant regulatory authority. The duration of validity may vary depending on the regulations and requirements of the specific jurisdiction or governing body.

Economic Factors

Investing money without going through the rigor of understanding and analyzing the investment s, their risk and return features, and appropriate value would be like taking a bet or speculating rather than investing. Such activity has a greater chance of losing rather than making money for the investors. Speculation is typically short-term calls made with leveraged funds, unlike investing money, which is a long-term disciplined activity for creating wealth.

True. A good analyst must keep track of disclosures, commitments, and deliveries of an organization periodically to assess the company's performance and financial health.

Government; Central Bank. The decisions of the Government (fiscal policy) and actions of the Central Bank (monetary policy) are the major influencers of public policies in an economy.

False. P-Notes (Participatory Notes) provide access of Indian securities to unregistered overseas investors through SEBI registered foreign portfolio investors.

To calculate the earnings yield, we divide the earnings per share (EPS) by the price of the stock and express it as a percentage.

Given:
Price of the stock = Rs 100
Earnings per share (EPS) = Rs 5

Earnings Yield = (EPS / Price) * 100

Substituting the given values:
Earnings Yield = (5 / 100) * 100
Earnings Yield = 5%

Therefore, the earnings yield of the stock is 5%.

Earnings Per Share (EPS) = Net Income / No. of Shares = 400,000 / 0.50 = 800,000 shares.

Return on Equity (ROE) is the Net Profit as a percentage of Equity. Net Profit is Rs 400,000. So, Equity will be 400,000 / (40 x 100) = 1,000,000.

Book Value = Equity / No. of Shares = 1,000,000 / 800,000 = 1.25.

Price to Book Value (P/BV) is a ratio that compares the current market price of a company's share to its book value. So, the Current Market Price = P/BV x Book Value = 6 x 1.25 = Rs 7.50.

Therefore, the Market Price of the company's share, based on the given data, is Rs 7.50.

A Balance Sheet of a company includes both the sources of funds (liabilities and shareholders' equity) and the application of those funds (assets). It provides a snapshot of the company's financial position at a given point in time, listing its assets, liabilities, and shareholders' equity.

Indian Depository Receipts are issued in India and are listed on an Indian Stock Exchange with foreign stocks as underlying shares.

Conduct. Analyzing each industry properly, as each industry has its peculiar behavior, is a part of Conduct Analysis of SCP analysis.

The P/E ratio (Price-to-Earnings ratio) is calculated by dividing the market price of the share by the earnings per share (EPS).

Given the information provided:
Net Profit = Rs 300 crores
Number of Outstanding Equity Shares = 4,72,60,223
Market Price = Rs 718

First, let's calculate the EPS:
EPS = Net Profit / Number of Shares
EPS = Rs 300 crores / 4,72,60,223
EPS = Rs 63.478

Next, we can calculate the P/E ratio:
P/E ratio = Market Price / EPS
P/E ratio = Rs 718 / Rs 63.478
P/E ratio ≈ 11.31

Therefore, the P/E ratio of the share is approximately 11.31.

A fundamental research analyst focuses on studying macroeconomic fundamentals. This includes analyzing factors such as economic indicators, government policies, inflation rates, interest rates, GDP growth, and other macro-level factors that can impact the overall economy. Studying historical price movements, trends, and volume is typically part of technical analysis, which is a different approach used by technical research analysts.

Intrinsic Value. The intrinsic value of an equity share is the present value of its expected future cash flows or benefits to the investors.

A Depository Participant (DP) is an agent of the depository. Depositories are institutions that hold securities of investors in electronic form. Investors open an account with the depository through a registered Depository Participant. The DP acts as an intermediary between the depository and the investors, providing depository services such as account opening, dematerialization, rematerialization, and other related services.

To calculate the P/E ratio, we need the Earnings per Share (EPS). Given that the dividend payout ratio is 25%, the EPS can be calculated as:

EPS = Dividend per Share / Dividend Payout Ratio
= 40% of Rs 5 / 25%
= (0.40 * 5) / 0.25
= Rs 2 / 0.25
= Rs 8

The P/E ratio is then calculated by dividing the Market Price per share by the Earnings per Share:

P/E ratio = Market Price per share / Earnings per Share
= Rs 48 / Rs 8
= 6

Therefore, the P/E ratio is 6.

The Earnings Yield can be calculated as the reciprocal of the P/E ratio multiplied by 100:

Earnings Yield = (1 / P/E ratio) * 100
= (1 / 6) * 100
= 16.67%

Hence, the Earnings Yield is 16.67%.

The per share data will deteriorate. In the case of Bonus Shares, the per share data (earning per share, book value per share, market price per share, etc.) will witness immediate deterioration as the total number of shares increases without any economic change in the profit and loss statement or balance sheet.

A Scheme of Arrangement should be approached to the National Company Law Tribunal (NCLT) as it is a court-monitored settlement process between the company and its creditors or members.

No. To be eligible for a share buyback, a company should not have defaulted on its payment of interest or principal on debentures, fixed deposits, or any other borrowings. Additionally, redeeming debt and equity is considered a negative cash flow in financing activities. A company with defaults may face financial difficulties and should prioritize meeting its obligations rather than repurchasing shares.

The Price-to-Earnings (P/E) ratio divided by the growth rate gives the Price/Earnings to Growth (PEG) ratio. The company with a lower PEG ratio (P/E of 40) is considered cheaper in terms of growth potential.

All of the Above. Fundamental analysis involves evaluating various factors to determine the intrinsic value of a security or business. It includes analyzing economic factors, such as market conditions and monetary policies, industry-specific factors, such as competition and market trends, and company-specific factors, such as financial statements and management performance. Considering all these factors together provides a comprehensive understanding of the investment opportunity.

Put Writer. In s, the buyers have the RIGHT but NO OBLIGATIONS, while the writers (sellers) have the obligations. The Put writer has the obligation to buy/take delivery of the asset from the Put Buyer at a predetermined price.

To calculate the net profit of the company, we need to find the equity of the company first.

Given:
Debt to Equity Ratio = 3:1
Total size of Balance Sheet = Rs. 40,00,000
Return on equity = 27%

Let's assume the debt as D and equity as E.
According to the Debt to Equity Ratio:
D/E = 3/1

We can set up the following equation:
D = 3E

The total size of the Balance Sheet is the sum of debt and equity:
D + E = Rs. 40,00,000

Substituting the value of D from the first equation:
3E + E = Rs. 40,00,000
4E = Rs. 40,00,000
E = Rs. 40,00,000 / 4
E = Rs. 10,00,000

Now, we can calculate the net profit using the return on equity:
Net Profit = Return on Equity * Equity
Net Profit = 27% * Rs. 10,00,000

Converting 27% to decimal form:
Net Profit = 0.27 * Rs. 10,00,000
Net Profit = Rs. 2,70,000

Therefore, the net profit of the company is Rs. 2,70,000.

Share swap means exchanging one set of shares with another set of shares. It is often used during a merger or acquisition when the acquiring company uses its own stock as cash to purchase the business. In a share swap, each shareholder of the acquired company receives a pre-determined amount of shares from the acquiring company.

True. A high Current Account Deficit (CAD) indicates a larger outflow of currency, which can weaken the nation's currency relative to other currencies.

The Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) are both controlled by the Department of Revenue, which operates under the Ministry of Finance. The Department of Revenue handles matters related to direct and indirect taxes.

Additional surveillance measures are not applicable to securities on which derivative products are available.

If a government changes its expansionary fiscal policy to a contractionary fiscal policy, the equity markets are likely to go down. A contractionary fiscal policy involves reducing government spending and increasing taxes, which can lead to decreased economic activity. This can negatively impact corporate profits and investor sentiment, causing a decline in equity markets. Therefore, a shift from an expansionary to a contractionary fiscal policy is generally associated with a downward trend in equity markets.

Rs 20 lakhs. To calculate the Asset to Equity ratio, we need to find the equity of the company. First, we determine the number of shares using the Earnings Per Share (EPS) formula. Then, we calculate the market price of a share using the Price to Earnings ratio. Finally, we compute the equity by multiplying the book value per share by the number of shares. The Asset to Equity ratio is then calculated by dividing the total assets by the equity. In this case, the equity is Rs 20 lakhs.

Net Interest Margin (NIM) is a unique parameter used for the evaluation of banks.

Both low interest rates and low inflation contribute to economic recovery from a recession. Low interest rates stimulate borrowing and investment, which can boost economic activity. Low inflation allows central banks to implement expansionary monetary policies, making credit more affordable and encouraging spending and investment. These factors combined can help revive economic growth and bring about a recovery from a recession.

Winner’s curse - The tendency to win a competitive bid even after overpaying for the asset. While behaviorally it is a win, financially, it may be a loss.

True. Companies are required to inform exchanges about their shareholding patterns and any changes periodically as part of regulatory compliance.

Rise. When interest rates fall, the old bonds with high coupon rates become attractive, leading to an increase in their prices.

To calculate the Current Assets, we can use the formulas for the Quick Ratio and Current Ratio:

Quick Ratio = (Current Assets - Inventories) / Current Liabilities
Current Ratio = Current Assets / Current Liabilities

Given that the Quick Ratio is 1.4, the Current Ratio is 2, and the Inventory levels are Rs 3,000, we can set up the following equations:

1.4 = (Current Assets - 3,000) / Current Liabilities
2 = Current Assets / Current Liabilities

To solve these equations simultaneously, we can use substitution. Rearranging the second equation, we have:

Current Assets = 2 * Current Liabilities

Substituting this value into the first equation, we get:

1.4 = (2 * Current Liabilities - 3,000) / Current Liabilities

Simplifying the equation:

1.4 * Current Liabilities = 2 * Current Liabilities - 3,000

1.4 * Current Liabilities - 2 * Current Liabilities = -3,000

-0.6 * Current Liabilities = -3,000

Dividing both sides by -0.6 to solve for Current Liabilities:

Current Liabilities = -3,000 / -0.6

Current Liabilities = Rs 5,000

Substituting this value back into the second equation, we find:

Current Assets = 2 * 5,000

Current Assets = Rs 10,000

Therefore, the Current Assets of the business are Rs 10,000.

False. The Growth Adjusted Price to Earning Ratio (PEG) is calculated as [Current price of stock / Earnings Per Share] / Growth rate.

The telecom industry also faces a threat of substitutes. Mobile phones have overtaken the once dominant landline phones. In the future, some new technology may make mobile phones obsolete. Some industries like power, healthcare, education, etc., do not have the threat of substitutes at all.

The portfolio was overweight in that security. If a fund manager sells a security to maintain its weight in the portfolio, it indicates that the portfolio was overweight in that security and needed to be rebalanced.

Bajaj Pulsar. In BCG Analysis, Question Marks are business segments in a fast-growing market but with low market share. Bajaj Pulsar is a successful product in a growing market with the potential to increase market share.

Department of Expenditure. The Department of Expenditure is involved with matters such as financial assistance to states and borrowings by states, along with overseeing the expenditure management of the Government of India.

All of the above. A good research analyst should possess clarity in financial concepts, the ability to read and understand financial statements, and a knack for numbers and interpretation.

High entry barriers in an industry indicate that there are significant obstacles for new entrants due to licensing requirements and substantial investments in specialized assets.

As per Regulation 17 of the Code of Conduct for research analysts, the bonus payable to a research analyst can be determined based on the overall revenue of the brokerage division, regardless of the sector or stocks covered. This means that the bonus is not tied to specific transactions or recommendations. This approach ensures fairness and avoids potential conflicts of interest.

All of the above factors affect analysis and decision making. Efficiency of operations impacts the effectiveness of processes and resource utilization. Management ethics influence the ethical considerations in decision making. Revenues and costs provide crucial financial information for analysis. Considering all these factors is essential for informed decision making.

Callable bonds allow the issuer to redeem/buy back the bonds prior to their original maturity date, making them a safe for issuers in a falling interest rate scenario.

True. Business risk, also known as operating risk, refers to the risk caused by factors that affect the day-to-day operations of a company. It includes risks related to sales volume, production efficiency, competition, technological changes, and other operational factors. Business risk directly impacts the company's profitability and ability to generate sustainable earnings.

Return on Capital Employed (ROCE) is calculated as (Earnings per Share / Book Value per share) x 100. In this case, it is (25 / 75) x 100 = 33.33%.

False. The analysis of historical stock prices of a company is called 'Technical Analysis,' not 'Company Analysis.'

Venture Capital Fund has the highest uncertainty in terms of return because it invests in early-stage companies with potential long-term growth, but also carries a high risk of failure.

Enterprise Value (EV) is a measure of a company's total value, representing the theoretical takeover price. It is calculated by adding the market value of equity (market capitalization) to the market value of debt and then subtracting cash and cash equivalents.

In the given scenario, the market capitalization is Rs 28 lakhs, the total debt is Rs 7 lakhs, and the cash and cash equivalents are Rs 6 lakhs. To calculate the Enterprise Value (EV), we can use the formula:

EV = Market value of equity + Market value of debt - Cash and cash equivalents

EV = Rs 28 lakhs + Rs 7 lakhs - Rs 6 lakhs
= Rs 29 lakhs

Therefore, the Enterprise Value (EV) based on the given information is Rs 29 lakhs.

Share Consolidation. In a share consolidation, the company changes the structure of its share capital by increasing the par value of its shares in a defined ratio and correspondingly reducing the number of shares outstanding to maintain the paid-up/subscribed capital.