QUESTION $(30$ marks$)$

CapeTown Elite Coffee $($Pty$)$ Ltd$.,$ is an up$-$and$-$coming high$-$quality coffee shop based

in Cape Town. The company has a $30$ June financial year$-$end. You have been

presented with the final trial balance of CapeTown Elite Coffee $($Pty$)$ Ltd$.$:

Final Extract of the trial balance of CapeTown Elite Coffee $($Pty$)$ Ltd at $30$ June:

Account Item

$2023$

Rands

$($Debits$)$

$2023$

Rands

$($Credits$)$

$2024$

Rands

$($Debits$)$

$2024$

Rands

$($Credits$)$

Bank $150000230000$

Short$-$term investments $2000025000$

Trade and other receivables $3000045000$

Inventories $($Coffee beans, snacks,

etc.$)$

$4000050000$

Property, plant, and equipment

$($PPE$)$

$300000330000$

Accumulated depreciation PPE $100000130000$

Trade and other payables $5000058000$

Short$-$term borrowings $5000045000$

Long$-$term borrowings $120000115000$

Owner's equity $($capital and

reserves$)$

$170000232000$

Revenue $420000510000$

Cost of sales $200000240000$

Operating expenses $100000115000$

Interest expense $80007500$

Taxation $3200038500$

Dividends declared $3000035000$

ANNEXURE J: SUMMATIVE ASSESSMENT $2$

$105$ HFAC$132-1-$Jan$-$Jun$2024-$SA$2-$LVN$-$V$4-20240516$

Additional notes:

$$ Growth:

CapeTown Elite Coffee $($Pty$)$ Ltd$.$ experienced robust growth in $2024,$ primarily

driven by an increase in customer demand. This growth was attributed to the

company's unique position as the sole premium coffee provider in the area, which

captured a larger market share and drew in more customers.

$$ Sales Growth:

The company observed significant sales growth, a direct result of broadening its

customer base. This was achieved not just through high$-$quality service but also by

introducing new and innovative products, such as exclusive coffee blends and

gourmet snacks, which resonated well with the customer's evolving preferences.

$$ Asset Acquisition:

In $2024,$ CapeTown Elite Coffee $($Pty$)$ Ltd$.$ strategically invested in the latest coffeemaking equipment and expanded its seating capacity by purchasing additional

tables and chairs. These actions were taken to enhance the customer experience

and to cater to the increasing customer footfall, ensuring the infrastructure supports

the company's growth trajectory.

$$ Depreciation:

CapeTown Elite Coffee $($Pty$)$ Ltd applies the straight$-$line depreciation method. As

a result, there was a consistent increase in the accumulated depreciation of the

property, plant, and equipment, reflecting the systematic allocation of the cost of

these assets over their useful lives.

$$ Liabilities:

The company made significant strides in strengthening its financial stability by

repaying portions of its short$-$term and long$-$term debt. This proactive approach to

debt management underscores CapeTown Elite Coffee $($Pty$)$ Ltd$\text{'}$s commitment to

maintaining a robust statement of financial position $($balance sheet$).$

$$ Equity:

The increase in equity for the year reflects the company's financial health, primarily

due to the retention of earnings after accounting for dividend payments and other

equity transactions. This indicates that the profits generated during the year were

substantial, bolstering the company's reserves and overall financial position.

ANNEXURE J: SUMMATIVE ASSESSMENT $2$

$106$ HFAC$132-1-$Jan$-$Jun$2024-$SA$2-$LVN$-$V$4-20240516$

$$ Cost of sales and Operating expenses:

The cost of sales and operating expenses witnessed an uptick, in line with the

expansion in sales volume and the scaling up of business operations. This increase

is reflective of the company's investment in quality and capacity to support the

higher demand and ensure sustained growth.

REQUIRED:

Calculate the following financial ratios of CapeTown Elite Coffee $($Pty$)$ Ltd$.$ for the $2024$

financial year and provide brief feedback on each variance:

$1.$ Income growth

$2.$ Asset growth

$3.$ Profit margin

$4.$ Return on assets

$5.$ Return on equity

$6.$ Dividend payout ratio

$7.$ Receivable turnover

$8.$ Inventory turnover

$9.$ Current ratio

ANNEXURE J: SUMMATIVE ASSESSMENT $2$

$107$ HFAC$132-1-$Jan$-$Jun$2024-$SA$2-$LVN$-$V$4-20240516$

Use the following table to prepare your answer:

$*$An example has been provided to help guide you with the structuring of your

response.

No$.$ Ratio Ratio Formula Final

Ratio

Answer

Feedback

No$.$

Example

Sales

Growth

$=$

$(510000420000)$

$420000$

$21\mathrm{.}4\%$ Sales have increased by

$21\mathrm{.}4\%$ from $2023$ to

$2024,$ indicating strong

growth in revenue.

Marks will be awarded as follows:

$$ Per Ratio Calculation and Feedback $3$ marks

$$ Presentation and communication $3$ marks

INSTRUCTIONS:

$-$ Compile all the required documents into a single PDF file.

$-$ Submit the PDF file on ColCampus as your final submission.

$-$ Ensure that your work is clear, legible, and organised.

$-$ You may complete an assignment that is handwritten, if necessary, but ensure your

work is neat and tidy for readability.

$-$ Presentation and communication and following assignment requirement instructions

will be awarded $3$ marks.

$(30$ marks$)$