Analyzing and Interpreting Financial Statements

**Section A** ServicePro recently executed a 1-for-3 rights issue at a price below the current market value. The proceeds were used entirely to pay down a long-term bank loan. Assuming profits remain unchanged, what is the most likely immediate effect on ServicePro's Return on Capital Employed (ROCE) and Gearing ratio?

SECTION A Meridian PLC had 2,000,000 ordinary shares in issue on 1 January 20X9. On 1 July 20X9, Meridian made a 1-for-4 bonus issue. Profit after tax for the year ended 31 December 20X9 was $750,000. What is the basic Earnings Per Share (EPS) for the year ended 31 December 20X9?

SECTION A Company X and Company Y operate in the same retail sector. Company X recently revalued its property portfolio upwards by 40%, while Company Y continues to hold its properties at historical cost. Assuming all other financial metrics are identical, what is the most likely impact of this revaluation on Company X's Return on Capital Employed (ROCE) compared to Company Y?

**Section A** A company transitions from renting a factory on a short-term basis (expensed to P&L) to signing a 10-year lease, recognizing a significant Right-of-Use (ROU) asset and lease liability under IFRS 16. Assuming operating profit remains exactly the same before and after the transition, what is the immediate impact on the Return on Capital Employed (ROCE) ratio?