Case Studie: Yell PLC is a telephone directory company who
are looking to grow their business by buying more equipment and taking over a
rival. The company currently have £4.5 million in retained profit but in two
years’ time should have an extra £1 million. Yell PLC operates in a competitive
market. They currently have 1 year to pay off their existing loan which they’re
paying back in 12 equal instalments with interest. Yell PLC hope to please
their shareholders by paying a significant dividend.
Question: 1.d.). Yell PLC wants to grow its business and need to raise money to help pay for more equipment and the £5millon needed to complete a takeover. Recommend if they should use retained profit or issue more shares (9 marks)
They should try to issue more shares because they get money because people are buying shares and they are also getting rid of how much they get from profits. Hope this helped.
