15-7. (Computing interest tax savings) Returning to Study Problem 15–1, you have now found out in an investors briefing session that Sharpgas Plc have suffered a reduction in profitability in the...

please answer question 15-7, thank you

Extracted text: 15-7. (Computing interest tax savings) Returning to Study Problem 15–1, you have now found out in an investors briefing session that Sharpgas Plc have suffered a reduction in profitability in the current year to the extent that their financial accounts will reflect an operating loss before interest and tax. They assure you that this is a short-term prob- lem. Revenue for 2016 was £30 million (2015 £32 million) and costs in 2016 look to have increased by £2 million from £28 million in 2015. Interest on the historic long- term debt is payable at 10 percent, and the dividend policy reflects a 2 percent increase each year for the last 10 years, with the quantum payment for 2015 being £1.2 million. The first tranche (£4 million) of debt repayment is due in six months’ time. Identify the problems and suggest options for maintaining shareholder confidence.


Extracted text: 15-1. (Calculating debt ratio) (Related to Checkpoint 15.1 on page 534) Sharpgas plc £m £m Current assets 6 Current liabilities 8 Long-term debt Shares Non-current assets 30 20 2 Reserves 36 36 You have just taken over a portfolio of bank clients including Sharpgas Plc. Their latest balance sheet is as above. What questions would you ask immediately with regard to their capital structure?