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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.
MARKS
QUESTION
Marks
REQUIRED
Study the statement of cash flows given below and answer the following questions:
Calculate the following:
Dividends paid
marks
Carrying value Book value of the equipment sold
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Cash and cash equivalents at the end of year
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Identify TWO items from this statement of cash flows that improve cash flow but do not increase profit.
marks
Explain why depreciation is added to operating profit in computing the cash flow from operating activities.
marks
There is a combination of a positive cash flow from operating activities of R and a negative cash flow from investing activities of R Is this favourable for Sinclair Ltd Provide THREE reasons for your answer.
marks
Comment on the following:
Decrease in inventory, R
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Increase in receivables, R
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INFORMATION
SINCLAIR LTD
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE
R
Cash flows from operating activities
Profit before interest and taxOperating profit
Adjustments to convert to cash from operations
Noncash flow adjustments
Depreciation
Loss on disposal of equipment
Profit before working capital changes
Working capital changes
Decrease in inventory
Increase in receivables
Decrease in payables
Cash generated from operations
Interest paid
Dividends paid
Income tax paid
Cash flows from investing activities
Noncurrent assets purchased
Proceeds from sale of equipment
Cash flows from financing activities
Proceeds from issue of ordinary shares
Increase in longterm borrowings
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at the end of year
QUESTION
Marks
REQUIRED
Use the information provided below to answer the following questions:
Comment on the financial result of the company.
marks
Is the company efficient in its collection of debts arising from credit sales? Motivate your answer by using an appropriate ratio.
marks
Will creditors allow credit under distress business conditions to Silverstone Limited? Explain your answer with the relevant ratio.
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Would the shareholders be happy with the profitability of the company? Use an appropriate ratio to motivate your answer.
marks
Calculate the ratio for that reflects how the stock market is judging the companyfs earnings performance and prospects.
marks
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.
marks
INFORMATION
Extracts of the statement of comprehensive income and statement of financial position of Silverstone Limited for and are as follows:
Statement of Comprehensive Income for the year ended December:
R
R
Sales
Cost of sales
Gross profit
Operating expenses
Operating profit
Profit before tax
Profit after tax
Statement of Financial Position as at December:
Assets
R
R
Noncurrent assets
Current assets
Inventory
Accounts receivable
Cash and cash equivalents
Total assets
Equity and liabilities
Shareholdersf equity
Noncurrent liabilities
Current liabilities Accounts payable only
Total equity and liabilities
Note:
All purchases and sales of inventories are on credit.
The credit terms to debtors are days.
There were shares in issue during
The market price per share was R on December
QUESTION
Marks
REQUIRED
Study the information given below and answer each of the following questions INDEPENDENTLY:
Calculate the margin of safety in units
marks
Calculate the total Contribution Margin and Operating ProfitLoss if the direct materials are expected to cost R per unit more and fixed manufacturing overhead costs are greater than projected.
marks
Calculate the variable cost per unit to break even, if the fixed costs and selling price per unit remain the same but the breakeven quantity changes to units.
marks
Use the contribution margin ratio to determine the level of sales in
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