Microsoft Word - Document8 Question 1 (8 marks) You are an analyst for an international investment house.
Question:
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Microsoft Word - Document8
Question 1 (8 marks)
You are an analyst for an international investment house. You are preparing an
annual analyst?s report on Bright Star Limited after the release of its 2016 results. The summarised financial information is presented below.
Bright Star Limited | 2016 R?000 | 2015 R?000 | |
Cash and short-term investments | 150 | 45 | |
Non-current assets | 2 000 | 1 900 | |
Total current assets (including cash and short-term investments) | 595 | 450 | |
TOTAL ASSETS | 2 745 | 2 395 | |
Total current liabilities | 450 | 430 | |
Non-current liabilities | 870 | 880 | |
TOTAL LIABILITIES | 1 320 | 1 310 | |
EQUITY | 1 425 | 1 085 | |
Net income | 550 | 425 | |
Cash flows from operating activity | 425 | 355 | |
Cash flow from investing activity | (105) | (95) |
Required:
. 1.1 For the 2016 year, calculate the aggregate actuals and accrual ratio on both the Balance Sheet and the cash flow approaches. You will need to calculate the net operating assets for 2015 and 2016. (6) ?
. 1.2 Calculate the cash component of 2016 earnings using the aggregate accruals from the cash flow approach, and comment on its meaning. (2) ?
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