QUESTION FOUR [25] 4.1 Wonder Wholesalers' credit terms to Shina Stores are 30 days but Wonder Wholesalers is prepared to allow a 24% discount if Shina Stores pays the account within 10 days. Required: Calculate the cost (as a percentage) to Shina Stores of forgoing the discount. (5) 4.2 The following information has been extracted from the financial records of Lulu Limited for the year ended 31 May 2020: R 720 000 Cash flows from operating activities Cash flows from operating activities Additions to plant and equipment Cash flows from financing activities Proceeds from shares issued (1 260 000) (1 260 000) 600 000 600 000 4.2.1 Calculate the cash balance as at 31 May 2020 if the cash balance on 31 May 2019 was R200 000 (favourable). (3) 4.2.2 Analyse the cash flows of the company. (7) 4.3 The monthly sales of a product sold by Molda Limited are 150 000 units. The purchase price is R16 per unit. The carrying cost of inventory amounts to 25% of the purchase price. The ordering cost is R12 per order. Calculate: 4.3.1 Annual economic order quantity (EOQ). (4) 4.3.2 The number of orders that need to be placed annually based on the EOQ. (2) 4.3.3 The total ordering costs and carrying costs. (4) Formula Sheet: Appendix 3 a. Current Ratio Current Assets : Current Liabilities b. Acid Test Ratio : Current Assets Inventory: Current liabilities C. Debt ratio = Total Debt Total Assets x 100 1 d. Times Interest Earned (interest cover) = EBIT Interest Expense e. Debt/equity ratio = Total Debt Total Equity x 100 1 f. Stock Turnover Cost of Sales Average Inventory II g. Days Sales in Inventory Average inventory X Cost of Sales 365 1 h. Debtors Collection Period II 365 Average Debtors Credit Sales 1 i. Creditors Payment Period Average Creditors X Credit Purchases 365 1 II j. Fixed Asset Turnover Turnover Fixed Assets (Net Book Value) k. Total Asset Turnover Turnover Average Operating Assets I. Gross Profit Margin Gross Profit Sales m. Net Profit Margin Net profit after interest and taxes Sales n. Return on Assets /(Rol) II Net profit after interest and taxes Average Total Assets 0. Return on Equity Net profit after interest and taxes Average Total Shareholders' Funds p. Dividend yield Dividend per share Price per share q. Earnings Yield Earnings per share Price per share Price Earnings Ratio (P/E) = Price per share Earnings per share 5. Dividend Cover = Earnings per share Dividend per share t Market to book Ratio Market value per share Book value per share u. Dividends per share Total Dividends No of shares issued v. Earnings per share = Net income after tax No of shares issued w. Equity Multiplier = Total Assets Total Equity