CAPRI LIMITED

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED $31$ DECEMBER $2021$

Cash flows from operating activities

Profit before interest and tax$/$Operating profit $900000$ Adjustments to convert to cash from operations $?$

Add: Depreciation $????$

R

$756000$

Profit before working capital changes Working capital changes

Decrease in inventory

Increase in receivables

Increase in payables

Cash generated from operations Interest income

Dividends paid

Company tax paid

Cash flows from investing activities

Non$-$current assets purchased

Proceeds from sale of vehicles $($sold at a profit of R$150000)$ Increase in long$-$term investments

Disposal of long$-$term investments $($disposed at a loss of R$150000)$

Cash flows from financing activities

Proceeds from issue of ordinary shares

Net increase$/$decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

$252000$

$?194400288000(396000)302400134640072000?(388800)$

$(1368000)(1476000)$

$540000(612000)180000$

$720000720000$

$?792000?$

CAPRI LIMITED

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER $2022$

R

ASSETS

Non$-$current assets $5040000$

Inventory

EQUITY AND LIABILITIES

Equity $7500000$

$4980000(1260000)132000061200002100000$ Accounts receivable $2460000$ Bank $156000011160000$

Property, plant and equipment $($cost$)$ Accumulated depreciation Investments

Current assets

Ordinary Share Capital

Retained Income $2382000$

$5118000$

Non$-$current liabilities

Loan

Current liabilities

Accounts payable Dividends payable

$2700000270000096000057600038400011160000$

CAPRI LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2022$

Sales

Cost of sales

Gross profit Operating expenses Operating profit Interest expense Interest income Profit before tax Company tax

Profit after tax

R

$8400000(5304000)3096000(1596000)1500000(324000)1200001296000(390000)906000$

In addition to the above, the following information is available:

Interim dividends paid in $2022$ amounted to R$456000.511800$ shares were in issue during $2022.$ The market price per share was R$17\mathrm{.}25$ on $31$ December $2022.$

During $2022$ the management of Capri Limited considered the acquisition a new machine for purchase and installation during the second quarter of $2024$ with a desired rate of return of $15\%.$ The machine will cost R$6000000$ excluding import duties of R$250000$ and will have a useful life of five years. The machine is expected to increase cash inflows by R$2000000$ per year but cash expenses will increase by R$300000$ per year. Depreciation is calculated using the straight$-$line method.

At the end of December $2022$ the company was approached by a group of previously disadvantaged women who had opened a service station on $01$ July $2022,$ selling only diesel. They needed assistance in improving the financial performance of the service station. Diesel was sold at R$16$ per litre and the variable costs totalled R$14$ per litre. The fixed costs were R$135000$ per month. After six months of opening, the sales achieved was $540000$ litres and the sales were almost the same each month. To improve the performance, the Capri Limited considered the following proposals:

Proposal $1$

Customers will be allowed to purchase diesel on credit. It is estimated that $60\%$ of the average monthly sales $($in litres$)$ will be to customers who would take advantage of this opportunity. Sales to these customers should increase by $25\%$ as they are expected to buy exclusively from this service station. Sales volumes to customers who do not take advantage of the credit policy are expected to remain unchanged. Additional costs arising from this proposal are expected to be:

$$ Bad debts of $1\%$ of the sales value in respect of customers who use the credit facility. $$ Fixed administrative costs of R$7500$ per month.

Proposal $2$

An operating profit of R$25000$ per month would be the target. To achieve this the following changes are suggested:

$$ The selling price is reduced by R$0\mathrm{.}30$ per litre.

$$ A sales commission of R$1\mathrm{.}50$ per $10$ litres sold will be granted to the diesel attendants.

$$ R$5075$ per month will be spent on advertising.

Proposal $3$

The possibility of only operating from $06$:$00$ to $22$:$00$ is being considered. This earlier closing time is expected to result in a loss of sales on average of $12500$ litres per month. It is hoped that the saving in fixed costs resulting from the reduction in operating hours will enable the entrepreneur to achieve an average monthly operating profit of R$30000.$

QUESTION $1(25$ Marks$)$

REQUIRED

Answer the questions below that are based on the Statement of Cash Flows for the year ended $31$ December $2021$ provided above:

$1\mathrm{.}1$ Calculate the following:

$1\mathrm{.}1\mathrm{.}1$ Dividends paid

$1\mathrm{.}1\mathrm{.}2$ Cash and cash equivalents at the end of the year

$1\mathrm{.}1\mathrm{.}3$ Carrying$/$ook value of