$-$Pack Ltd $($Re$-$Pack$)$ is an entity that specialised in packaging material with astrong focus on sustainability and recycling. Re$-$Pack is listed on the AlternativeExchange $($AltX$)$ on the Johannesburg Stock Exchange $($JSE$).$Re$-$Pack develops, manufactures and sells sustainable packaging materials. Theentitys packaging materials are environmentally friendly, from the glue and print onthe materials, to the material itself being biodegradable while durable. Re$-$Pack alsoprovides facilities for consumers to recycle pre$-$used packaging materials, which Re$-$Pack then collects and uses in the manufacturing of new packaging materials. Theentitys packaging materials include boxes of various sizes, protective materials forwhen goods are transported, paper and bags.Financial year$-$end resultsRe$-$Pack has a $29$ February financial yearend and applies the International FinancialReporting Standards $($IFRS$)$ when preparing the entitys accounting records.On $29$ February $2024,$ Re$-$Packs auditors preformed an inventory count. According toIFRS, packaging materials qualifies as Re$-$Packs inventory from the raw materialsto the finished goods. It was determined from the inventory count that: Re$-$Pack had raw materials on hand to the value of R$890450.$ Packaging materials that were in the process of being manufactured on $29$February $2024,$ had a total accumulated cost valued at R$850100.$ Packagingmaterials that are in the process of being manufactured, are considered work$-$in$-$progress $($WIP$).$ Packaging materials that have been completed and are ready for sale on $29$February $2024,$ have a total cost price of R$1307000.$All of Re$-$Packs inventory on hand as at $29$ February $2024,$ will either be used or soldduring the next $12$ months.ANNEXURE F: FORMATIVE ASSESSMENT $169$ HFMN$331-1\_$Jul$-$Dec$2024\_$FA$1\_$V$4\_$ES$\_02072024$Re$-$Pack earned revenue of R$12550900$ during the period $1$ March $2023$ to $29$February $2024.$ This includes revenue for selling the entitys packaging materials aswell as for service delivery performed by Re$-$Pack both of these components areconsidered part of the entitys primary business activities. The underlying costpertaining to these sales are R$5070300.$Re$-$Packs debtors list indicates accounts receivable to the value of R$310700$ as at$29$ February $2024.$ This is after bad debt to the value of R$6600$ that occurred duringthe $2024$ financial year has been removed. Re$-$Packs accounts payable age analysisindicates a total of R$963000$ as at $29$ February $2024.$ Re$-$Pack has the intention tosettle the full value of the entitys accounts payable balance. Both the accountsreceivable and accounts payable values can be considered correct and will be settledby $28$ February $2025.$According to the Re$-$Packs bank statements, Re$-$Pack has R$1008800$ available asof $29$ February $2024.$According to Re$-$Packs Property, Plant and Equipment policy, the cost model is used.Re$-$Pack owns land, buildings, machinery, vehicles and equipment. These have a totalcost price of R$18741000$ while the total accumulated depreciation is R$4990100$ asat $29$ February $2024.$ The R$4990100$ accumulated depreciation already accounts forthe R $508000$ depreciation for the $2024$ financial year. No accumulated impairment isapplicable. All these values have been assessed on $29$ February $2024$ by the externalauditors and confirmed to be correct.Re$-$Pack also owns intellectual property regarding the entitys knowledge on themanufacturing of sustainable packaging material. Although this intellectual propertyhas been internally generated, Re$-$Pack has sufficiently demonstrated its technical andcommercial feasibility as well as the fact that it is able to generate future economicbenefits. A patent has also been obtained in Re$-$Packs name in order to protect thisintellectual property. The total capitalised cost of the intellectual property isR$15500000$ and the accumulated amortisation is R$1820000$ as at $29$ February $2024.$The R$1820000$ accumulated amortisation already accounts for the R$331000$amortisation for the $2024$ financial year. No accumulated impairment is applicable. AllANNEXURE F: FORMATIVE ASSESSMENT $170$ HFMN$331-1\_$Jul$-$Dec$2024\_$FA$1\_$V$4\_$ES$\_02072024$these values have been assessed on $29$ February $2024$ by the external auditors andconfirmed to be correct.Additional information Re$-$Packs ordinary shares are trading at R$51\mathrm{.}70$ each on the AltX as on $29$February $2024.$ Re$-$Pack has $6$ million authorised ordinary shares but only $1\mathrm{.}5$ million ordinaryshares have been issued. The issued ordinary shares reflect a value of R$2250000$on the annual financial statements of $29$ February $2024.$ Re$-$Pack also owns $4000$ ordinary shares of another, unrelated entity calledMountain Ltd$.$ These ordinary shares are carried in the annual financial statementsat R$96000.$ Other expenses incurred during the $2024$ financial year total R$1774150.$ Theseexpenses consist of salaries, administrative expenses, transportation expensesand water and electricity. Any other expenses mentioned elsewhere have not beenincluded as part of the R$1774150.$ Re$-$Pack has a seven $(7)$ year loan from BNF Bank. The loan was taken out on $1$March $2021$ for R$3650000.$ According to the loan agreement, the loan is subjectto $8\mathrm{.}2\%$ interest quarterly compounding and equal repayments are scheduled oneach anniversary of the loan. According to the $2024$ annual financial statements, Re$-$Packs retained earningsclosing balance is R$26860792\mathrm{.}15.$ This amount already accounts for anydividends declared during the $2024$ financial year. The South African Income Tax rate for companies is $27\%.$ It may be assumed thatall the expenses $($besides for any finance cost$)$ and income items aretaxable$/$deductible for tax purposes and are to the same value according to theSouth African Income Tax Act.ANNEXURE F: FORMATIVE ASSESSMENT $171$ HFMN$331-1\_$Jul$-$Dec$2024\_$FA$1\_$V$4\_$ES$\_02072024$REQUIRED:$2\mathrm{.}1.$ Assist Re$-$Pack Ltd by calculating the below figures for the $29$ February$2024$ financial year. Round to two decimals where applicable$\mathrm{.}2\mathrm{.}1\mathrm{.}1.$ Earnings Before Interest and Taxation $($EBIT$)(3$ marks$)2\mathrm{.}1\mathrm{.}2.$ Earnings Before Interest, Taxation, Depreciation and Amortisation $($EBITDA$)(2$ marks$)2\mathrm{.}1\mathrm{.}3.$ Gross Profit MarginSupplement your answer by also interpreting the result.$(3$ marks$)2\mathrm{.}1\mathrm{.}4.$ Interest CoverSupplement your answer by also interpreting the result.$(9$ marks$)2\mathrm{.}1\mathrm{.}5.$ Net Profit MarginSupplement your answer by also interpreting the result.$(5$ marks$)2\mathrm{.}1\mathrm{.}6.$ Financial Leverage Multiplier$(5$ marks$)2\mathrm{.}1\mathrm{.}7.$ Return on Assets $($ROA$).$ Re$-$Pack Ltd wish to base this on the Net Profitfigure. Supplement your answer by also interpreting the result.$(3$ marks$)2\mathrm{.}1\mathrm{.}8.$ Return on Equity $($ROE$)\mathrm{.}2\mathrm{.}1\mathrm{.}8\mathrm{.}1$ Use the financial leverage multiplier to calculate your answer$\mathrm{.}2\mathrm{.}1\mathrm{.}8\mathrm{.}2.$ Use the equity figure to calculate your answer$\mathrm{.}2\mathrm{.}1\mathrm{.}8\mathrm{.}3$ Interpret the resulting answer for the calculated ROE.$(4$ marks$)$ANNEXURE F: FORMATIVE ASSESSMENT $172$ HFMN$331-1\_$Jul$-$Dec$2024\_$FA$1\_$V$4\_$ES$\_020720242\mathrm{.}1\mathrm{.}9.$ Quick ratioSupplement your answer by commenting on whether Re$-$Pack Ltds quickratio is healthy.$(5$ marks$)2\mathrm{.}1\mathrm{.}10.$Debt to Equity ratio $(2$ marks$)2\mathrm{.}1\mathrm{.}11.$P$/$E ratio.Supplement your answer by also interpreting the result.$(3$ marks$)2\mathrm{.}2.$ Perform a six capital analysis on Re$-$Pack Ltd$.$