1 1.1 REQUIRED Use the percentage-of-sales method to determine the increase in the net working capital requirements of Umdloti Suppliers for 2023. INFORMATION (6marks) The following information was extracted from the financial statements of Umdloti Suppliers for 2022. R Sales Debtors Creditors Short-term loans Cash and cash equivalents Inventory Umdloti Suppliers anticipates sales of R9 000 000 for 2023. 1.2 REQUIRED Use the information provided below to answer thefollowing questions: 1.2.1 Calculate the return on net assets and current ratio for al three companies (expressed to two decimal places). 12.2 Comment on the return and risk associatedwith Company Z from your calculations ni question 1.2.1. 7200 000 1800 000 1080 000 1296000 360 000 2 160 000 INFORMATION Information pertaining to the working capital policies of three companies are reflected below: Sales Company X Company Y Company Z Conservative Moderate Aggressive RI 4500 000 4 500 000 4 500 000 (100 MARKS) (20 MARKS) (6 marks) (4 marks) Operating profit Current assets Current liabilities Non-current assets 540 000 3 600 000 1350 000 2 700000 540 000 3 000 000 1 650 000 2 700 000 540 000 2 250 000 2 025 000 2 700000 (4 marks) 1.3 Short-term financing may be obtained on a secured basis by means of factoring. Evaluate factoring as source of short-term financing. 2 QUESTION 2 (20 MARKS) 2.1 REQUIRED Use the information provided below to calculate the following: 2.1.1 Economic Order Quantity 2.1.2 The number of orders that need to be placed each year 2.1.3 Total ordering costs and carrying costs. INFORMATION (3 marks) (2 marks) (4 marks) | The average monthly demand for Product Vin sold by Eastate Traders is 30 000 units. The carrying cost per unit of inventory amounts to R10. The ordering cost is R20 per order. 2.2 REQUIRED Calculate the rate of inventoryturnover from the information provided below. INFORMATION The following figures were supplied by Ross Stores for 2022: Inventory on 01 January Inventory on 31 December Sales Gross profit (4 marks) R 225 000 405 000 5 130 000 1350 000 2.3 REQUIRED Determine the value of inventory as at 31 October 2022 and gross profit for October 2022 from the information supplied below. Prepare an extract of the Statement of Comprehensive Income to present your answer. (7marks) INFORMATION You are provided with the inventory record of Compuman, which sells laptops, for the month ended 31 October 2022. The businessuses thespecific identification method to value inventories. Inventory record for laptops for the month ended 31 October 2022: M o d e l Purchase Inventory on Purchases Sales Inventory on price 01 October and carriage 31 October R Units Units R Units P r i c e Units R Mecer 1000 21 ? 35 ? 51 R14000 ? ? ? 3 Asus 13000 14 ? 66 ? 60 R17000 ? ? ? Dell 15000 1 ? 39 ? 40 R19000 ? ? ? Note: The purchase price was unchanged during October 2022. The purchase prices above exclude carriage on purchases of R100 for each laptop. 4 QUESTION 3 (20 MARKS) 3.1 REQUIRED Answer thefollowing questions from the information providedbelow: 3.1.1 Calculate the profit that Westpac Stores would make fi the account is settled within 10 days. 3.1.2 Should the customer fail to pay the amount due and the account is written of after 90 days, how much would the loss be to Westpac Stores? INFORMATION (4 marks) (2 marks) Westoac Stores intends selling a television setoncredit.The selling price of the television set is R12 000 . Themark-up is 50% on cost. Credit terms of 3/10 net 60 wereagreed upon. The cost of capital is 18%. 3.2 REQUIRED fI Umbro Trader's required rate of return on equal-risk investments is 18%, should the proposed increase ni the discount offered (from 2% to 4%) be made? Show all calculations. (9 marks) INFORMATION The credit terms of Umbro Traders are currently 2/10 net 30. The selling price of the only product that it offers for sale is R200 per unit and the variable costs are R110 per unit. Thefirm wants to determine the overall effect on profit fi ti changes its credit terms, by increasing the settlement discount from 2% ot 4%. The table below shows the current situation and the expected changes arising from the new credit terms: Debtors collection period Creditsales Bad debts Percentage of the credit sales that the discount wil apply to Current: 2/10 net 30 36.5 days 23 000 units 4% ofsales 65% Proposed: 4/10 net 30 29.2 days 28 000 units 1% of sales 75% 3.3 REQUIRED Use the information provided below to calculate the annual net cost of factoring to Pedi Limited. (5 marks) 5 INFORMATION The current annual sales of Pedi Limited are R2 600 000, of which 75% is on credit. The debtors represent an average of 54.75 days sales. The management of Pedi Limited is experiencing a cash flow problem and si considering factoring the company's debtors. Afactor, HG Financiers, has offered the folowing deal: Service charge of 4% of credit sales; Finance charge of 20% of outstanding debtors; Retention of 10% to be held by the factor. The agreement is expected to save Pedi Limited costs amounting to R1 700 per month. 6 QUESTION 4 (20 MARKS) REQUIRED Use the information provided below to calculate the cost (as a percentage, expressed to two decimal places to Gan's Stores offorgoing the discount. (5 marks) INFORMATION StarrManufacturers'credit terms to Gan's Stores are 30 daysbut the manufacturer is preparedto allowa discount ofR315 if Gan's Stores pays the account of R10 500 within 12 days. 4.2 REQUIRED Study the information provided below and answer the following questions: 4.2.1 Calculate the cash balance as at 30 September 2021, fi the company had an overdraft of R60 000 on 30 September 2022. 4.2.2 Of what significance are the details of the investing activities to investors? 4.2.3 Provide an interpretation of the extract of the Statement of Cash Flows with reference to the operating, investing and financing activities. 2 marks) (2 marks) (6 m a r k s INFORMATION The extracts of the Statement of Cash Flows of VIP Limited for the year ended 30 September 2022 are provided below: Statement of Cash Flows for the year ended 30 September 2022 Cash flows from operating activities Cash flows from investing activities Purchase of property, plant and equipment Cash flows from financing activities Increase ni long-term borrowings 4.3 Businesses that use petty cash to make payments are prone to fraud or theft. Suggest FIVE (5) internal control measures that a business can employ to prevent fraud or theft from this source. R 1 200 000 (1 800 000) 1( 800000) 800 000 800 000 (5 marks) 7 QUESTION 5 (20 Marks) 5.1 REQUIRED Use the information provided below to determine the following: 5.1.1 EOQ if discounts are not available 5.1.2 The quantity that should be ordered considering the discounts thatare available INFORMATION The folowing information was provided by AB Suppliers for a product that ti sells: (2 marks) (10 marks) Annual demand Unit cost Fixed cost per order Annual carrying cost per unit The supplier offered a discount scheme as follows: Discount 0% 4% 5% 6% 5.2 REQUIRED 2 0 0000units 1 R50 1 R 10 0 20% of unit cost Study theinformation provided below and calculate the following: 5.2.1 Gross profit for the year ended 31 December 2022 using the weighted average cost method(withtheaveragepriceperunitexpressedtothenearestcent). Youranswer must include the value of closing inventory disclosed ni the format of the statement of comprehensive income. 5.2.2 Value of closing inventory fi the FIFO method is used. INFORMATION (6 marks) (2 marks) Riva Stores had the following inventory of rice on 01 January 2022, the start of the financial year: Quantity 120 bags 8 0 bags Unit purchase price R180 R188 Carriageon purchases per unit R20 R20 Order size 0-3 199 3 200 - 7 999 8 000- 19 999 20 0 0 0 + 8 During 2022 thefollowing transactions took place: 500 bags were purchased atR200 each on 30 April 2022. Carriage amounted to R20 per unit. 100 bags that were purchased on 30 April 2022 were returned to the supplier one day later. No refund could be obtained on the carriage. 400 bags were purchased at R240 each on 30 September 2022. Carriage amounted to R24 per unit. Note: Carriage on purchases are not included in the purchase prices. Sales: During the year 800 bags were sold. 500 bags were sold for R320 each and the balance was sold at R340 each. END OF PAPER TOTAL: 100 MARKS