Posted: March 29th, 2022
Fatimah Power Company (FPC) is the primary subsidiary of Fool-Nation Power Group, representing 90% of their operating revenues. FPC is a utility company that supplies electric service in most of the major cities of Pakistan. Their service area contains 770,605 square miles which translates into approximately 14.4 million customers. Of these 14.4 million customers, as a percentage of operating income, roughly 30% comes from residential customers, 65% from commercial, 3% from industrial, and the remaining 2% from other sources. The company on annual basis paying a tax of 45% on its corporate earnings.
The financial statements of FPC show that it is financially very strong company and it has enough liquid assets to meets it’s working capital requirement. However, it floated new preferred stocks in the primary market last year at a price of Rs. 100 per share and has promised to pay dividend of Rs. 3 per share to its preferred stockholders and incurred floatation costs of Rs. 1.5 per share. The company’s capital structure after floatation of preferred stock in the open market has changed and now its capital structure includes 40% debts and 15% preferred stocks. The company’s pre-tax interest rate on debt is 9% and has paid a dividend of Rs. 2 per share to its common stockholders last year.
Pakistan’s government has recently taken drastic steps to boost investment for industrial
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