a company manufactures harnesses

OF BUSINESS ADMINIST 1.1 XML Limited presented the Statement of Comprehensive Income below for its most recent financial year. QUESTION 1 ASSIGNMENT 6: ACCOUNTING AND FINANCIAL MANAGEMENT (20) R Sales Cost of sales 743 000 402 000 Gross profit Operating expenses Income from operations Other income 341 000 145 000 196 000 1 100 26 000 Other expenses Profit before tax 171 100 60 000 Income tax Net profit 111 100 (4) 1.1.1 Explain the difference between "sales" and "other income". 1.1.2 XML Limited would like to earn a large gross profit by selling its products at a much higher price than its cost. Describe two factors that may prevent it from doing so. (2) (3) 1.1.3 Explain how cost of sales, operating expenses and other expenses are different from one another. 1.1.4 Explain why cost of sales, operating expenses, other expenses and income tax are listed separately in the Statement of Comprehensive Income rather than being lumped together as one item. (2) 1.1.5 Explain why the Statement of Comprehensive Income presented above is inadequate to provide a proper interpretation of the financial result of XML Limited for the financial year. (2) PROGRAMME HANDBOOK: JANUARY 2020 INTAKE MANCOSA: BACHELOR OF BUSINESS ADMINISTRATION HONOURS 1.2 The Statement of Comprehensive Income for 2019 and 2018 given below were extracted from the accounting 59 records of Teddy Manufactures limited: Teddy Manufactures Limited Statement of Comprehensive Income for the year ended 31 December Net sales Cost of sales Gross profit 2019 (R) 1 003 600 1905 600) 2018 (R) 901 300 (744 300) Selling, general and administrative expenses Income from operations 98 000 (92 000) 157 000 (65000) 6 000 92 000 Other income/expenses Non-operating income Interest expense Profit before tax 124 500 (90 500) 18 000 (57000) 40 000 (12 000) 53000 (15 900) Income tax Net profit 28 000 37 100 Required: Refer to the Statement of Comprehensive Income of Teddy Manufacturers Limited for 2019 and 2018 and comment on the performance of the company including the operating profit earned. Take into account that the profit margin (percentage Profit after tax to sales) for the industry was 4.51% in 2018 and 2.60% in 2019. (4) (3) 1.3 Name THREE transactions that improves cash flow but does not increase profit. QUESTION 2 (20) As a financial manager of Xerox Enterprises, you are required to analyse two proposed capital investments, Projects A and B. Each has a cost of R100 000, and the cost of capital for each project is 12%. Depreciation on each project is estimated at R25 000 per year. The projects' expected profit are as follows: Project B Project A Year 1 2 3 4 R40 000 RS 000 R5 000 (R15 000) R10 000 R10 000 R10 000 R10 000 (8) (8) (1 (E Required 2.1 Calculate the payback period for each project (In years, months and days). 2.2 Calculate the NPV for each project. 2.3 Indicate with a reason which project should be chosen by Xerox Enterprises. 2.4 Calculate the ARR for project A. PROGRAMME HANDBOOK: JANUARY 2020 INTAKE