The following is the extract of Balance Sheet of Yellow Limited as on 31.03.2025: Particulars ₹ 4,00,000 Equity shares of 10 each 40,00,000 General…

Determination of Buy-back of maximum no. of shares as per the Companies Act, 2013 1. Shares Outstanding Test Particulars (Shares) Number of shares outstanding 4,00,000 25% of the shares outstanding 1,00,000 2. Resources Test: Maximum permitted limit 25% of Equity paid up capital + Free Reserves Particulars Paid up capital (₹) 40,00,000 Free reserves (₹) (48,00,000 + 18,00,000 + 10,00,000) 76,00,000 Shareholders' funds (₹) 1,16,00,000 25% of Shareholders fund (₹) 29,00,000 Buy-back price per share 25 Number of shares that can be bought back (shares) 1,16,000 Actual Number of shares for buy-back 80,000 3. Debt Equity Ratio Test: Loans cannot be in excess of twice the Equity Funds post Buy-Back Debt Equity ratio of the company should not exceed 2:1 after such buy-back. In this case, the debt is 92,00,000 (60,00,000 + 32,00,000)* and equity after such buy back will be - 96,00,000 (1,16,000 – 20,00,000). Thus, the debt equity ratio is 0.96:1, which is less than 2:1. Company qualifies all tests for buy-back of shares and came to the conclusion that it can buy 80,000 equity shares @25. * Total debt may be considered (i.e including current liability).