If the parent undertaking owns 60% of subsidiary Lev Ltd and Lev Ltd owns 40% of another subsidiary Hinds Ltd. What percentage of Hinds Ltd is owned by the parent company?
To determine the effective ownership that the parent company has in Hinds Ltd through its subsidiary Lev Ltd, we need to calculate the indirect ownership stake.
The parent undertaking owns 60% of Lev Ltd. Then Lev Ltd owns 40% of Hinds Ltd. The effective ownership of the parent company in Hinds Ltd can be computed by multiplying these percentages:
Effective ownership of Hinds Ltd by the parent company = 60% of Lev Ltd * 40% of Hinds Ltd
= 0.60 * 0.40
= 0.24
= 24%
So, through Lev Ltd, the parent undertaking effectively owns 24% of Hinds Ltd.