FINAL ONLINE SUMMATIVE ASSESSMENT

PROGRAMME Bachelor of Business Administration Honours

Postgraduate Diploma in Business Management

Postgraduate Diploma in Family Business Management

MODULE Accounting and Financial Management

INTAKE January $2023$

DATE $24$ November $2023$

$[100$ MARKS$]$

Answer all questions in this paper $[100$ Marks$]$

QUESTION $1(20$ Marks$)$

REQUIRED

Study the Statement of Cash Flows given below and answer the following questions:

$1\mathrm{.}1$ Calculate the amount paid out for company tax. $(3$ marks$)$

$1\mathrm{.}2$ Did the company obtain funds from its financing activities? Motivate your answer with the relevant

calculations. $(3$ marks$)$

$1\mathrm{.}3$ Of what significance are the details of Westham Limited$$s investing activities to a potential investor? $(4$

marks$)$

$1\mathrm{.}4$ Write a report to the board of directors to provide an interpretation of the Statement of Cash Flows of

Westham Limited for the year ended $31$ December $2022.$ Your report must focus on the cash flows from

operating activities, increase in inventory, increase in receivables, increase in payables and purchase of

plant and equipment. $(10$ marks$)$

INFORMATION

The Statement of Cash Flows of Westham Limited for the year ended $31$ December $2022$ appears below:

WESTHAM LIMITED

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED $31$ DECEMBER $2022$

R

Cash flows from operating activities $(540000)$

Operating profit $2850000$

Non$-$cash flow adjustment:

Depreciation $1058700$

Profit before working capital changes $3908700$

Working capital changes $(2424000)$

Increase in inventory $(2400000)$

Increase in receivables $(1800000)$

Increase in payables $1776000$

Cash generated from operations $1484700$

Dividends paid $(1200000)$

Company tax paid $?$

Cash flows from investing activities $(6900000)$

Purchase of plant and equipment $(6900000)$

Cash flows from financing activities $?$

$??$

Net increase $($decrease$)$ in cash $?$

Cash balance $(31$ December $2021)9600000$

Cash balance $(31$ December $2022)2100000$

QUESTION $2(20$ Marks$)$

REQUIRED

Use the information provided below to answer the following questions.

Note: Use formulas provided in the formula sheet only $($that appear after QUESTION $5).$ Answers to the ratios

must be expressed to two decimal places.

$2\mathrm{.}1$ Calculate the percentage profit on sales after the cost of sales only have been accounted for. $(2$ marks$)$

$2\mathrm{.}2$ Has the liquidity of the company improved? Use two relevant ratios to motivate your answer. $(6$ marks$)$

$2\mathrm{.}3$ Use the relevant ratios to comment on the effectiveness with which the company has employed the inventory

and debtors during $2022.(6$ marks$)$

$2\mathrm{.}4$ Use TWO $(2)$ appropriate ratios that shareholders would use to assess the profitability of the company for

$2022$ by examining the after$-$tax returns earned. Comment on your calculations. $(6$ marks$)$

INFORMATION

Extracts of the financial statements of Ultra Limited are presented below:

ULTRA LIMITED

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

R

Sales $(90\%$ on credit$)8800000$

Cost of sales $4000000$

Operating profit $2400000$

Profit after tax $1400000$

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER:

$2022($R$)2021($R$)$

Non$-$current assets $68000005600000$

Inventory $380000300000$

Trade and other receivables $($Accounts receivable only$)520000460000$

Cash and cash equivalents $320000400000$

Shareholders$$ equity $50000003800000$

Non$-$current liabilities $24000001900000$

Current liabilities $6200001060000$

Additional information

$$ The authorised share capital of the company consists of $1500000$ ordinary shares of which $1000000$ have

been issued.

QUESTION $3(20$ Marks$)$

$3\mathrm{.}1$

REQUIRED

Study the information provided below and answer the following questions:

$3\mathrm{.}1\mathrm{.}1$ If the sales manager$$s proposal is rejected, calculate the total revenues at break$-$even by using the

contribution margin ratio. $(4$ marks$)$

$3\mathrm{.}1\mathrm{.}2$ Calculate the additional expenditure that the company can afford to spend on advertising, in keeping with

the sales manager$$s proposal. $(4$ marks$)$

$3\mathrm{.}1\mathrm{.}3$ Calculate the break$-$even quantity if the sales manager$$s proposal is accepted $($using the proposed new

selling price and the increase in the advertising outlay$).(4$ marks$)$

INFORMATION

Denel Enterprises manufactures a product that sells for R$180$ each. The company presently produces and sells

$120000$ units per year. Unit variable manufacturing expenses and variable selling expenses are R$90$ and $10\%$

of the sales price respectively. Fixed costs are R$4536000$ for manufacturing overheads and R$1944000$ for

selling and administrative activities. The sales manager has proposed that the price be increased to R$216$ per

unit. To maintain the present sales volume, advertising must be increased. The company$$s profit objective is

$10\%$ of sales.

$3\mathrm{.}2$

REQUIRED

Study the information given below and answer the following questions independently:

$3\mathrm{.}2\mathrm{.}1$ If Dundee Limited wants to achieve an operating profit of R$972000,$ calculate the target sales value without

using the contribution margin ratio. $(4$ marks$)$

$3\mathrm{.}2\mathrm{.}2$ Based on the expected sales volume, what sales price