Companies, share capital and equity

This topic covers company share capital, dividends, retained income, rights issues and share buy-backs. The 5 questions here are worth 24 marks in the November 2024 Paper 1 set. Of the 24 marks, 16 are for the correct final answer, 6 for method and working and 2 for explaining. Numbers of shares and dates decide most answers, so read them closely.

The 2024 Diagnostic Report says candidates did not work out the net profit after tax from the dividend pay-out rate, which the retained income note needs. Interim dividends per share were divided by the shares at the start or the end of the year when the number of shares had changed. In a rights issue the ratio was not applied, so the extra shares were wrong, and a repurchase price was not compared with the market price and the net asset value. Write the share numbers in a small table before you calculate.

Where marks are lost: in our words, from Department of Basic Education, NSC 2024 Diagnostic Report, Part 1 (Book 1).