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answer all questions in this section. [ 1 0 0 MARKS ] QUESTION 1 ( 2 0 Marks ) REQUIRED Study the statement of cash

answer all questions in this section.
[100 MARKS]
QUESTION 1
(20 Marks)
REQUIRED
Study the statement of cash flows given below and answer the following questions:
1.1
Calculate the following:
1.1.1
Dividends paid
(2 marks)
1.1.2
Carrying value (Book value) of the equipment sold
(2 marks)
1.1.3
Cash and cash equivalents at the end of year
(2 marks)
1.2
Identify TWO (2) items from this statement of cash flows that improve cash flow but do not increase profit.
(2 marks)
1.3
Explain why depreciation is added to operating profit in computing the cash flow from operating activities.
(2 marks)
1.4
There is a combination of a positive cash flow from operating activities of R1504000 and a negative cash flow from investing activities of R8384000. Is this favourable for Sinclair Ltd? Provide THREE (3) reasons for your answer.
(6 marks)
1.5
Comment on the following:
1.5.1
Decrease in inventory, R264000
(2 marks)
1.5.2
Increase in receivables, (R3712000)
(2 marks)
INFORMATION
SINCLAIR LTD
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021
R
Cash flows from operating activities
1504000
Profit before interest and tax/Operating profit
10136000
Adjustments to convert to cash from operations
Non-cash flow adjustments
6176000
Depreciation
6000000
Loss on disposal of equipment
176000
Profit before working capital changes
16312000
Working capital changes
(4112000)
Decrease in inventory
264000
Increase in receivables
(3712000)
Decrease in payables
(664000)
Cash generated from operations
12200000
Interest paid
(3744000)
Dividends paid
?
Income tax paid
(2880000)
Cash flows from investing activities
(8384000)
Non-current assets purchased
(10576000)
Proceeds from sale of equipment
2192000
Cash flows from financing activities
8640000
Proceeds from issue of ordinary shares
2880000
Increase in long-term borrowings
5760000
Net increase in cash and cash equivalents
?
Cash and cash equivalents at beginning of year
1440000
Cash and cash equivalents at the end of year
?
QUESTION 2
(20 Marks)
REQUIRED
Use the information provided below to answer the following questions:
2.1
Comment on the financial result of the company.
(2 marks)
2.2
Is the company efficient in its collection of debts arising from credit sales? Motivate your answer by using an appropriate ratio.
(3 marks)
2.3
Will creditors allow credit under distress business conditions to Silverstone Limited? Explain your answer with the relevant ratio.
(3 marks)
2.4
Would the shareholders be happy with the profitability of the company? Use an appropriate ratio to motivate your answer.
(4 marks)
2.5
Calculate the ratio for 2021 that reflects how the stock market is judging the companyfs earnings performance and prospects.
(4 marks)
2.6
Explain the impact on the cost of sales in the statement of comprehensive income if LIFO rather than FIFO method of valuing inventories is used during periods of rising prices.
(4 marks)
INFORMATION
Extracts of the statement of comprehensive income and statement of financial position of Silverstone Limited for 2021 and 2020 are as follows:
Statement of Comprehensive Income for the year ended 31 December:
2021(R)
2020(R)
Sales
6400000
5440000
Cost of sales
4000000
3264000
Gross profit
2400000
2176000
Operating expenses
960000
1056000
Operating profit
1440000
1120000
Profit before tax
1280000
1040000
Profit after tax
896000
728000
Statement of Financial Position as at 31 December:
Assets
2021(R)
2020(R)
Non-current assets
7600000
6400000
Current assets
5240000
4400000
Inventory
2440000
1600000
Accounts receivable
1000000
1680000
Cash and cash equivalents
1800000
1120000
Total assets
12840000
10800000
Equity and liabilities
Shareholdersf equity
9880000
8800000
Non-current liabilities
1600000
800000
Current liabilities (Accounts payable only)
1360000
1200000
Total equity and liabilities
12840000
10800000
Note:
All purchases and sales of inventories are on credit.
The credit terms to debtors are 30 days.
There were 2000000 shares in issue during 2021.
The market price per share was R5.50 on 31 December 2021.
QUESTION 3
(20 Marks)
REQUIRED
Study the information given below and answer each of the following questions INDEPENDENTLY:
3.1
Calculate the margin of safety (in units).
(4 marks)
3.2
Calculate the total Contribution Margin and Operating Profit/Loss, if the direct materials are expected to cost R30 per unit more and fixed manufacturing overhead costs are 10% greater than projected.
(4 marks)
3.3
Calculate the variable cost per unit to break even, if the fixed costs and selling price per unit remain the same but the break-even quantity changes to 6000 units.
(4 marks)
3.4
Use the contribution margin ratio to determine the level of sales in

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