Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SAMAs Distributors has appointed a new warehouse manager to assist with the re-organising of their infrastructure to increase their competitiveness. The firms financial statements for

SAMAs Distributors has appointed a new warehouse manager to assist with the re-organising of their infrastructure to increase their competitiveness. The firms financial statements for 2020 showed the following:

Excerpt from the 2020 Financial Statements of SAMAs Distributors:

Annual sales turnover R50 million Fixed assets R15 million Inventory R 5 million Debtors R 3 million Creditors R 5 million Cash in bank R 1 million Petty cash R 500 000 Purchases R 25 million Other operating costs R 5 million Cost of materials 50% of cost of sales

Using the above information, calculate the following for SAMAs Distributors:

Round all calculations to 2 decimal places.

(a) Profit margin (b) Asset turnover rate (c) Return on investment (d) Assuming a 5% reduction in material costs, what will the increase in profit be? (e) If the same profit increase as in (d) were to be generated by increasing sales, what increase in Rand would be required? Use the existing profit margin in your calculation.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Property Finance

Authors: David Isaac

2nd Edition

0333987144, 978-0333987148

More Books

Students also viewed these Finance questions

Question

What are the main types of service process?

Answered: 1 week ago