$\mathrm{.}1$

REQUIRED

Use the information provided below to calculate the effective interest rate $($expressed to two decimal

places$)$ in each of the following cases:

$1\mathrm{.}1\mathrm{.}1$ The interest is discounted. $(3$ marks$)$

$1\mathrm{.}1\mathrm{.}2$ There is a $15\%$ compensating balance requirement. $(3$ marks$)$

INFORMATION

Natto Limited plans to borrow R$5000000$ for one year. The stated interest rate is $16\%.$

$1\mathrm{.}2$

REQUIRED

Use the information provided below to answer the following questions:

$1\mathrm{.}2\mathrm{.}1$ Calculate the current ratio and return on net assets of both companies $($expressed to

two decimal places$).(8$ marks$)$

$1\mathrm{.}2\mathrm{.}2$ Comment on the working capital, profitability and risk of both companies. $(6$ marks$)$

INFORMATION

The following information was obtained from the financial statements of Company D and Company E$,$

which are similar companies:

Company D Company E

R R

Sales $20000002000000$

Operating profit $300000300000$

Non$-$current assets $16000001600000$

Inventories $80000836000$

Accounts receivable $60000680000$

Cash $1000084000$

Non$-$current liabilities $800000800000$

Accounts payable $120000370000$

Expenses payable $500040000$