QUESTION $2(20$ Marks$)$

$2\mathrm{.}1$

REQUIRED

Use the information provided below to determine the cost $($as a percentage, expressed to two decimal places$)$

to Sibiya Stores of not accepting the discount. Assume a $360-$day year.

$(4$ marks$)$

INFORMATION

The credit terms granted by Mega Manufacturers to Sibiya Stores are $3/10$ net $60$ days.

$2\mathrm{.}2$

REQUIRED

Use the information given below to calculate the following:

$2\mathrm{.}2\mathrm{.}1$ Economic Order Quantity $(4$ marks$)$

$2\mathrm{.}2\mathrm{.}2$ Re$-$order point. $(3$ marks$)$

INFORMATION

The following details have been supplied by Tonga Suppliers for the only product that it sells:

Sales per month $3000$ units

Carrying costs as a percentage of the unit purchase price $10\%$

Purchase price per unit R$50$

Cost of placing an order R$25$

The time that elapses between placing an order and the receipt of the products $12$ days

Number of days that Tonga Suppliers operates in a year $240$ days

$2\mathrm{.}3$

REQUIRED

Use the Dividend Growth Model to estimate the cost of the ordinary shares $($expressed as a percentage to

two decimal places$)$ from the information provided below.

$(4$ marks$)$

INFORMATION

The present value of a Torga Limited ordinary share is R$50,$ the dividend at the end of the previous year was

R$8$ and the expected growth rate in dividends is $10\%$ p$.$a$.$

$2\mathrm{.}4$

REQUIRED

Use the information provided below to calculate the weighted average cost of capital $($expressed as a

percentage to two decimal places$).$

$(5$ marks$)$

INFORMATION

The optimal capital share of Yolo Limited is $60\%$ ordinary share, $10\%$ preference share and $30\%$ debt

financing. The pre$-$tax costs of capital for ordinary shares, preference shares and debt are $18\%,15\%$ and

$20\%$ respectively. The tax rate is $27\%.$

QUESTION $3(20$ Marks$)$

REQUIRED

Study the information provided below and prepare the following for July and August $2024.$

$3\mathrm{.}1$ Debtors Collection Schedule $(4$ marks$)$

$3\mathrm{.}2$ Cash Budget $(16$ marks$)$

INFORMATION

Glenville Limited is in the process of developing a cash budget for July and August $2024.$ The following

information is available:

$1.$ Expected sales from May to August $2024$ are as follows:

May R$750000$

June R$850000$

July R$1500000$

August R$1000000$

$2.$ Historically $70\%$ of the company$$s sales has been on cash and the rest on credit. Twenty percent

$(20\%)$ of the cash sales is subject to a discount of $10\%.$

$3.$ Sixty percent $(60\%)$ of the credit sales is usually collected in the month after the sales, thirty five percent

$(35\%)$ is collected two months after the sale and the balance is written off as bad debts.

$4.$ During August $2024$ the company expects to receive a dividend of $8$ cents per share on the $70000$

shares that it holds in Camry Limited.

$5.$ The company$$s purchases of inventory are estimated to be $60\%$ of sales. Thirty percent $(30\%)$ is paid

in cash and a discount of $10\%$ is receivable. The balance is paid in the month after the purchase.

$($Separate entries are required for the cash purchases and payments for credit purchases.$)$

$6.$ The monthly rental, payable at the end of each month, will increase by $10\%$ with effect from $01$ August

$2024.$ The rental payable on $31$ August is R$26400.$

$7.$ The fixed salary cost for $2024$ is R$420000$ and is paid evenly every month.

$8.$ Interest on loan for two months at a rate of $15\%$ per year is payable on the loan balance of R$150000$

during August $2024.$

$9.$ New machinery with a cost price of R$450000$ will be purchased and paid for during July $2024.$

$10.$ Other cash operating expenses are forecast at R$200000$ for June $2024$ and are expected to increase

by $5\%$ each month.

$11.$ Cash in the bank on $30$ June $2024$ is expected to amount to R$20000.$

QUESTION $4(20$ Marks$)$

REQUIRED

Use the information provided below to answer the following questions.

$4\mathrm{.}1$ Calculate the following ratios for $2023$ only. Note: Use the formulas provided in the formula sheet

only $($that appear after QUESTION $5).$ Answers to the ratios must be expressed to two decimal

places.

$4\mathrm{.}1\mathrm{.}1$ Inventory turnover $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}2$ Net profit margin $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}3$ Debt$-$equity $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}4$ Earnings per share $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}5$ Finance cost coverage $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}6$ Average collection period $(2$ marks$)$

$4\mathrm{.}2$ Will the company be able to pay its short$-$term debts if business conditions are

unfavourable? Motivate your answer by using an appropriate ratio. $(4$ marks$)$

$4\mathrm{.}3$ Will the shareholders of the company be satisfied with the return on their investments?

Support your answer with the use of an appropriate ratio. $(4$ marks$)$

INFORMATION

The extracts of the financial statements of Fabrice Limited for $2022$ and $2023$ are provided below.

FABRICE LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2023$

R

Sales $990000$

Cost of sales $600000$

Earnings before interest and taxes $250000$

Interest expense $30000$

Profit before tax $220000$

Company tax $59400$

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER:

$2023($R$)2022($R$)$

Non$-$current assets $13680001140000$

Inventories $360000220000$

Accounts receivable $180000250000$

Cash and cash