MAC3702 Assignment 1 (ANSWERS) 2023 - DISTINCTION GUARANTEED

Well-structured MAC3702 Assignment 1 (ANSWERS) 2023 - DISTINCTION GUARANTEED . (DETAILED ANSWERS - DISTINCTION GUARANTEED!)...... Question 1 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Question 2 Complete Mark 1.00 out of 1.00 Calculate the creditors’ payment period. 1. 51 days 2. 56 days 3. 55 days 4. 61 days Which of the following statements regarding the asset turnover ratio are more accurate? a) The ratio shows how many rands of sales are generated from each rand invested in the assets of the business. b) The ratio indicates effective use of property, plant and equipment in generating revenue for the business. c) The ratio shows which assets are more effective in generating revenue for the business. d) The ratio may be used to indicate possible impairments in the assets of the business. e) The ratio indicates the effectiveness of the assets in producing profi ts for the business. 1. Options (b) and (c) 2. Options (a) and (d) 3. Options (b), (c) and (e) 4. Options (a), (b) and (d) Question 3 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Calculate the change in gross profi t margin. 1. 12,2% 2. 44,2% 3. 16,0% 4. 13,8% Question 4 Complete Mark 0.00 out of 1.00 Mayibuye Limited Mayibuye Limited is a Capetown-based FMCG company and the company distributes its products across the country throughmultiple channels. The company is listed on the Johannesburg Stock Exchange (JSE). Statement of profi t and loss and other comprehensive income Mayibuye Limited for the year ended 31 December 2021 R Turnover 7 418 925 Cost of Sales (5 193 248) Gross profi t 2 225 677 Salaries and wages (684 518) Selling and administrative expenses (472 500) Other operating expenses (607 500) Interest income 5 670 Finance costs (100 000) Profi t before taxation 366 829 Income tax expenses (102 712) Profi t for the year 264 117 Extract of the statement of fi nancial position at 31 December 2021 of Mayibuye Limited: R Ordinary share capital (R0,60 each) 1 200 000 Redeemable preference share capital 550 000 Retained income 757 234 Share-based payment reserve 80 059 Shareholders for dividends 41 923 Deferred tax liability 75 138 Long-term portion of the long-term loan 880 000 Short-term portion of the long-term loan 120 000 Trade and other payables 497 996 Trade and other receivables 914 707 The fi nance team has also provided the following information and key ratios: Turnover (2020) 7 023 920 Gross profi t (2020) 1 931 553 Share price on 1 January 2022 (cents) 612,50 Inventory turnover (times) 26,07 Price/sales multiple (times) 2,15 Dividend cover (times) 4,50 Company policies All assets are depreciated using a straight-line method. Sales and purchases are on credit and the company operates 365days a year. The company’s dividend policy is to maintain a fi xed dividend cover and its fi nal dividend is double the interimdividend. The company procures a minimum of 20% of their merchandise from suppliers with a BBBEE contribution level of 4. Calculate the interest-bearing debt to EBITDA of Mayibuye Limited for 31 December 2021 (assume EBITDA of R475 000). Round your fi nal answer to two decimal places. 1. 3,26:1 2. 2,11:1 3. 1,85:1 4. 3,01:1 Question 5 Complete Mark 1.00 out of 1.00 Gravel Galore is a company owned by Josaf Mokele and Michale Molefi . They started 10 years ago on a open piece of landnext to Josaf’s home, in their own community to provide sand, stone, gravel, concrete and more to the local people to assistthem to gain access to these types of building material more easily. They became very successful quite fast and they were forced to start looking for a bigger piece of land. They started todiversify into more types and sort of material needed for building purposes. Josaf Mokele and Michale Molefi are starting to investigate the opportunities to buy even bigger land just outside Piet Retief.They are asking for your assistance in this regards. You can assume that the discount rate is 9% and cost of capital is 12%. The project will have the following cash fl ows: Year Cash Flow R’million 0 (200) 1 40 2 60 3 80 4 100 5 120 Should Gravel Galore invest in projects with NPV = R0? 1. Gravel Galore should look at the PI and IRR of the projects 2. Yes 3. No 4. Gravel Galore is indifferent between accepting or rejecting projects with zero NPVs Question 6 Complete Mark 1.00 out of 1.00 Question 7 Complete Mark 1.00 out of 1.00 The cash operating cycle is defi ned as the overall number of days between the cash payment for input and the cash receiptfor output. The correct formula for calculating the cash operating cycle is? 1. Debtor’s days – Raw material time lag – Creditor’s days + Work in progress time lag + Finished goods time lag. 2. Raw material days + Debtor’s days – creditor’s days + work in progress time lag + fi nished goods time lag 3. Raw material time lag + Work in progress time lag – Finished goods time lag + Debtor’s days – Creditor’s days. 4. Debtor’s days + Raw material time lag + Creditor’s days + Work in progress time lag + Finished goods time lag. What is the capitals of an entity? 1. Financial capital, human capital, intellectual capital and natural capital. 2. Financial capital , human capital, intellectual capital, manufactured capital, natural capital and social capital. 3. Financial capital, intellectual capital and social capital. 4. Human capital, intellectual capital, manufactured capital, natural capital and social capital. Question 8 Complete Mark 0.00 out of 1.00 Mayibuye Limited Mayibuye Limited is a Capetown-based FMCG company and the company distributes its products across the country throughmultiple channels. The company is listed on the Johannesburg Stock Exchange (JSE). Statement of profi t and loss and other comprehensive income Mayibuye Limited for the year ended 31 December 2021 R Turnover 7 418 925 Cost of Sales (5 193 248) Gross profi t 2 225 677 Salaries and wages (684 518) Selling and administrative expenses (472 500) Other operating expenses (607 500) Interest income 5 670 Finance costs (100 000) Profi t before taxation 366 829 Income tax expenses (102 712) Profi t for the year 264 117 Extract of the statement of fi nancial position at 31 December 2021 of Mayibuye Limited: R Ordinary share capital (R0,60 each) 1 200 000 Redeemable preference share capital 550 000 Retained income 757 234 Share-based payment reserve 80 059 Shareholders for dividends 41 923 Deferred tax liability 75 138 Long-term portion of the long-term loan 880 000 Short-term portion of the long-term loan 120 000 Trade and other payables 497 996 Trade and other receivables 914 707 The fi nance team has also provided the following information and key ratios: Turnover (2020) 7 023 920 Gross profi t (2020) 1 931 553 Share price on 1 January 2022 (cents) 612,50 Inventory turnover (times) 26,07 Price/sales multiple (times) 2,15 Dividend cover (times) 4,50 Question 9 Complete Mark 1.00 out of 1.00 Company policies All assets are depreciated using a straight-line method. Sales and purchases are on credit and the company operates 365days a year. The company’s dividend policy is to maintain a fi xed dividend cover and its fi nal dividend is double the interimdividend. The company procures a minimum of 20% of their merchandise from suppliers with a BBBEE contribution level of 4. Calculate the change in gross profi t margin of Mayibuye Limited for year ended 31 December 2021. Round your fi nal answer to two decimal places. 1. 30,00% 2. 9,09% 3. 15,23% 4. 2,50% Company Zitron has 15 million shares in issue with a current market price of R225. This company tendered for a new fuelcontract that they were successful in. This led to the market price per share to increase to R250. What is the market’sconsensus of the NPV that the new contract will generate for Zitron? 1. R3 375 million 2. R3 750 million 3. R375 million 4. R300 million Question 10 Complete Mark 0.00 out of 1.00 Question 11 Complete Mark 0.00 out of 1.00 Which of the following statements are more accurate? a) The higher the expected infl ation, the higher the return required by investors. b) IRR is an annualised percentage return expected for the duration of the project. c) When calculating the NPV of a project, wear and tear should be deducted from cash profi ts to arrive at the net annualcash fl ows. d) A project that yields a negative NPV must always be rejected. e) IRR is the cost of capital where the NPV of a project is zero. Choose the CORRECT combination: 1. Options (a), (b), (c) and (d) 2. Options (a), (b) and (e) 3. Options (b), (d) and (e) 4. Options (d) and (e) The following dividend theories are listed: a) Agency cost theory suggest that fi rms with high cash fl ows should make high dividend pay-outs. b) Miller-Modigliani irrelevance theory points that initiating or decreasing dividends is perceived as good news by themarket and results in an increase in share price. c) Bird-in-hand theory. This theory means that investors prefer fi rms that currently pay dividends than those fi rms thatretain earnings and pay dividends in the future. d) Investors that have their expectations and preferences on the dividend pay-out policy is referred to as the clienteleeffect on dividend theory e) The tax preference theory is the dividend policy in a perfect capital market and changes thereto have no impact on theshareholder value. Which statements above are FALSE? 1. Statements (a) and (b) 2. Statements (d) and (e) 3. Statements (a), (c) and (e) 4. Statements (b) and (e) Question 12 Complete Mark 1.00 out of 1.00 Question 13 Complete Mark 1.00 out of 1.00 The following net present value (NPV) is presented to you. Assume all calculations were done correctly: T Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Cost () Working capital (1 670 000) 1 670 000 Operational costs (1 300 000) (1 300 000) (1 300 000) (1 300 000) (1 300 000) Sales income 5 796 000 6 143 760 6 512 386 6 903 129 7 317 316 () 4 496 000 4 843 760 5 212 386 5 603 129 7 694 439 The weighted average cost of capital of the company is 7%. The current JIBAT rate is 10% and cost of equity will be 9%. Thecompany tax rate is 28%. What is the discounted factor that will be used in the calculation of the NPV? 1. 9% 2. 7% 3. 10% 4. 7,2% What will the present value factor of 15% be in year 3? 1. 0,8696 2. 0,5718 3. 0,4972 4. 0,6576 Question 14 Complete Mark 0.00 out of 1.00 Polokwane Systems (Pty) Ltd Polokwane Systems (Pty) Ltd is a medium size entity that manufactures and sells electronic gate remotes to retailers forresale and installation. Because of an increase in security risks, the company had to expand to meet the growing demand.Many new players have recently entered the market and customers are in the position to negotiate favourable credit terms.Polokwane Systems (Pty) Ltd is now reviewing its credit policies, with intentions to change its credit terms currently offeredto its customers. Additional information: · The budgeted turnover for the next year is expected to be R3 240 000, if the current credit term of one month offered bythe company is extended to two months (this will be a 10% increase from current turnover levels). If the credit term isextended to three months, the turnover will increase to R3 600 000. Credit term is determined after the invoice date and allsales are on credit. · It is anticipated that bad debts will be 2% of the total turnover for a credit term of one month, 3% for a credit term of twomonths and 6% for a credit term of three months. The rest of the customers will adhere to the credit terms. · A cash discount of 5% is offered to customers making their payments within 15 days. Roughly 20% of customers use thediscount for early payment. All other customers use normal credit terms. Discount allowed and received are classifi ed asoperating expenses and income respectively. · The company marks up its goods by two-thirds of cost. The company negotiates and sticks to a credit term of 60 dayswith all its suppliers. You can assume there is 365 days in a year. · The cash operating and administration costs are estimated at R130 000 per year. · The balances of the working capital accounts for the current year are as follows: o Bank account: R200 000 (opening credit balance) o Trade receivables: R230 000 (closing balance) o Trade payables: R270 000 (closing balance) , · The company currently pays interest on the bank overdraft balance of 8,25% per year. This rate also approximates thecompany’s weighted average cost of capital. The company earns an average of 3,5% per annum based on the closing bankbalance, if favourable. Calculate the average debtors’ time-lag for the current year. Round your fi nal answer to two decimal places. 1. 32,39 days 2. 28,79 days 3. 28,50 days 4. 25,91 days Question 15 Complete Mark 0.00 out of 1.00 The following statements with regards to credit decisions and trade-offs are given. (a) Price elasticity measures the responsiveness of the demand for a product to a change in price. (b) The granting of credit can be thought of as a trade-off between holding cash and holding accounts receivable. (c) When an increase in sales occurs because of increased credit terms, the gains in sales revenue will be offset byincreased inventory holding costs, increased creditors, increase in cost of fi nancing debtors and incurrence of bad debts. (d) Companies targets sales as a method to increase profi tability. When sales increase and paid for by customers in cash,the company will benefi t by having an increase in profi ts. (e) Granting of credit to customers can be seen as a trade-off between holding inventory and holding accounts receivable. Which of the above statements are TRUE ? 1. Options (a), (b), (c), (d) and (e) 2. Options (a), (c) and (e) 3. Options (a), (b) and (c) 4. Options (b), (c), (d) and (e) Question 16 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 Question 17 Complete Mark 1.00 out of 1.00 Question 18 Complete Mark 0.00 out of 1.00 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Assume that it takes Papraika Stores an average of 103 days to collect from its debtors and 61 days to settle its creditors,calculate the cash conversion cycle. 1. 164 days 2. 42 days 3. 196 days 4. 183 days What does ‘credit 3/15 net 45’ mean? 1. 3% discount is granted if the account is settled within 15 days. If not, the account is payable within 45 days. 2. 3 out of every 15 debtors will settle their accounts within 45 days. 3. 3% discount is granted if the account is settled within 15-45 days. If not, normal credit terms apply. 4. The discount in the range of 3% and 15% is granted for accounts settled within 45 days of the sale. Which fi nancial analysis statement is incorrect? 1. The analysis of the performance of an entity from the perspective of the fi nancial market is the performance -relatedanalysis. 2. The profi tability ratios analyses the entity’s ability to generate income, to effectively control its expenses and togenerate an acceptable profi t compared to the previous year, the industry, competitors and the budget. 3. The liquidity measures the entity’s ability to pay its debts as well as when they fall due. 4. The return on invested capital analysis the ability of an entity to generate a return relative to an investment base andto minimize non-essential payments. Question 19 Complete Mark 1.00 out of 1.00 Gravel Galore is a company owned by Josaf Mokele and Michale Molefi . They started 10 years ago on a open piece of landnext to Josaf’s home, in their own community to provide sand, stone, gravel, concrete and more to the local people to assistthem to gain access to these types of building material more easily. They became very successful quite fast and they were forced to start looking for a bigger piece of land. They started todiversify into more types and sort of material needed for building purposes. Josaf Mokele and Michale Molefi are starting to investigate the opportunities to buy even bigger land just outside Piet Retief.They are asking for your assistance in this regards. You can assume that the discount rate is 9% and cost of capital is 12%. The project will have the following cash fl ows: Year Cash Flow R’million 0 (200) 1 40 2 60 3 80 4 100 5 120 Calculate the net present value of the proposed Piet Retief project. 1. R 2. R 3. R 4. R Question 20 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Calculate the capital gearing ratio. 1. 0,50:1 2. 0,54:1 3. 0,46:1 4. 0,35:1 MAC3702-24-S1  Welcome Message  Assessment 1 Started on Thursday, 28 March 2024, 11:48 AM State Finished Completed on Thursday, 28 March 2024, 1:08 PM Time taken 1 hour 20 mins Marks Grade out of 100.00 Question 1 Complete Mark 0.00 out of 1.00 QUIZ The net asset value per share are calculated as follows: 1. Dividing the total assets of the company with the amount of ordinary shares. 2. Dividing the net current assets of the company with the ordinary shares. 3. Dividing the equity of the company with the ordinary shares. 4. Dividing the total assets less the creditors with the ordinary shares. 17.00/20.00 85.00 Question 2 Complete Mark 1.00 out of 1.00 Question 3 Complete Mark 0.00 out of 1.00 Consider the following statements: a) The number of days between the receipt of material and the actual cash payment made to the supplier is called the rawmaterial time lag. b) Net wo rking capital is a fi nancial indicator to gauge the liquidity of a business. c) Management has no infl uence on tax payable on profi ts. d) When a company makes an investment in inventory and debtors in return for increased cash fl ow from the extra sales,the granting of credit is viewed as an investment decision e) The d uration of the cash cycle can be reduced by an increase in inventory turnover. Choose the correct option: 1. Statemen ts (b), (d) and (e) 2. Statements (a) and (b) 3. Statements (c), (d) and (e) 4. Statements (b), (c), (d) and (e) The following dividend theories are listed: a) Agency cost theory suggest that fi rms with high cash fl ows should make high dividend pay-outs. b) Miller-Modigliani irrelevance theory points that initiating or decreasing dividends is perceived as good news by themarket and results in an increase in share price. c) Bird-in-hand theory. This theory means that investors prefer fi rms that currently pay dividends than those fi rms thatretain earnings and pay dividends in the future. d) Investors that have their expectations and preferences on the dividend pay-out policy is referred to as the clienteleeffect on dividend theory e) The tax preference theory is the dividend policy in a perfect capital market and changes thereto have no impact on theshareholder value. Which statements above are FALSE? 1. Statements (d) and (e) 2. Statements (b) and (e) 3. Statements (a), (c) and (e) 4. Statements (a) and (b) Question 4 Complete Mark 1.00 out of 1.00 Company A’s shares are currently trading at R2,50. Its PE multiple is 12 with a dividend yield of 3%. Calculate Company A’sdividend cover. 1. 0,36 2. 4 3. 0,83 4. 2,78 Question 5 Complete Mark 0.00 out of 1.00 Mayibuye Limited Mayibuye Limited is a Capetown-based FMCG company and the company distributes its products across the country throughmultiple channels. The company is listed on the Johannesburg Stock Exchange (JSE). Statement of profi t and loss and other comprehensive income Mayibuye Limited for the year ended 31 December 2021 R Turnover 7 418 925 Cost of Sales (5 193 248) Gross profi t 2 225 677 Salaries and wages (684 518) Selling and administrative expenses (472 500) Other operating expenses (607 500) Interest income 5 670 Finance costs (100 000) Profi t before taxation 366 829 Income tax expenses (102 712) Profi t for the year 264 117 Extract of the statement of fi nancial position at 31 December 2021 of Mayibuye Limited: R Ordinary share capital (R0,60 each) 1 200 000 Redeemable preference share capital 550 000 Retained income 757 234 Share-based payment reserve 80 059 Shareholders for dividends 41 923 Deferred tax liability 75 138 Long-term portion of the long-term loan 880 000 Short-term portion of the long-term loan 120 000 Trade and other payables 497 996 Trade and other receivables 914 707 The fi nance team has also provided the following information and key ratios: Turnover (2020) 7 023 920 Gross profi t (2020) 1 931 553 Share price on 1 January 2022 (cents) 612,50 Inventory turnover (times) 26,07 Price/sales multiple (times) 2,15 Dividend cover (times) 4,50 Question 6 Complete Mark 0.00 out of 1.00 Company policies All assets are depreciated using a straight-line method. Sales and purchases are on credit and the company operates 365days a year. The company’s dividend policy is to maintain a fi xed dividend cover and its fi nal dividend is double the interimdividend. The company procures a minimum of 20% of their merchandise from suppliers with a BBBEE contribution level of 4. Calculate the price/book value multiple of Mayibuye Limited on 31 December 2021. Round your fi nal answer to two decimal places. 1. 13,29 2. 21,95 3. 12,93 4. 7,83 The following statements with regards to credit decisions and trade-offs are given. (a) Price elasticity measures the responsiveness of the demand for a product to a change in price. (b) The granting of credit can be thought of as a trade-off between holding cash and holding accounts receivable. (c) When an increase in sales occurs because of increased credit terms, the gains in sales revenue will be offset byincreased inventory holding costs, increased creditors, increase in cost of fi nancing debtors and incurrence of bad debts. (d) Companies targets sales as a method to increase profi tability. When sales increase and paid for by customers in cash,the company will benefi t by having an increase in profi ts. (e) Granting of credit to customers can be seen as a trade-off between holding inventory and holding accounts receivable. Which of the above statements are TRUE ? 1. Options (a), (b), (c), (d) and (e) 2. Options (b), (c), (d) and (e) 3. Options (a), (b) and (c) 4. Options (a), (c) and (e) Question 7 Complete Mark 0.00 out of 1.00 The following statements with regards to credit decisions and trade-offs are given. (a) Price elasticity measures the responsiveness of the demand for a product to a change in price. (b) The granting of credit can be thought of as a trade-off between holding cash and holding accounts receivable. (c) When an increase in sales occurs because of increased credit terms, the gains in sales revenue will be offset byincreased inventory holding costs, increased creditors, increase in cost of fi nancing debtors and incurrence of bad debts. (d) Companies targets sales as a method to increase profi tability. When sales increase and paid for by customers in cash,the company will benefi t by having an increase in profi ts. (e) Granting of credit to customers can be seen as a trade-off between holding inventory and holding accounts receivable. Which of the above statements are TRUE ? 1. Options (a), (b) and (c). 2. Options (b), (c), (d) and (e) 3. Options (a), (b), (c), (d) and (e) 4. Options (a), (c) and (e) Question 8 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Calculate the price/book value multiple. 1. 32,9 times 2. 2,96 times 3. 15,9 times 4. 1,40 times Question 9 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 Question 10 Complete Mark 1.00 out of 1.00 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Calculate the net interest cover, taking “other income” into account. 1. 3,2 times 2. 3,8 times 3. 2,8 times 4. 2,4 times The details for 2 projects (Project Zama and Project Exerta) of a Deliberate (Pty) Ltd are given. Period Project Zama Project Exerta R’000 R’000 0 (R370 000) (R170 000) 1 R185 000 R85 000 2 R160 000 R35 000 3 R65 000 R15 000 4 R60 000 R5 000 Calculate the internal rate of return (IRR) for both projects. (Round your answer to two decimal places). 1. Project A 13% and Project B 11% 2. Project A 12,80% and Project B 12,00% 3. Projec t A 13,14% and Project B 11,34% 4. Project A 14,13% and Project B 13,34% Question 11 Complete Mark 0.00 out of 1.00 Question 12 Complete Mark 1.00 out of 1.00 Which of the following statements are inaccurate? a) The equivalent annual income technique considers the useful life of the project, and not the time value of money. b) Where there are funding constraints, projects with the highest NPV must be chosen. c) When comparing two projects with different lives, NPV ∞ technique can be used to evaluate both projects. d) After considering qualitative factors and availability of funds, mutually exclusive projects that generate a positive NPVcan be chosen within a company. e) Interest expenses incurred in funding the project must be ignored when calculating the cash fl ows in an NPV evaluation. Choose the CORRECT combination: 1. Options (a), (b) and (d) 2. Options (b), (d) and (e) 3. Options (a), (c) and (d) 4. Options (b) and (e) The following statements with regards to the investment decision are given: a) Costs that have already been incurred before an investment is made, such as market research that was done, should betaken into consideration as a sunk cost. b) The allowances should always be accounted for at the tax rate provided or the current company tax rate. c) All investments should be evaluated at the target WACC. Assumptions made in this regard will then be that all projectsbeing evaluated are of the same risks class, the current WACC will not be equal to the target WACC and the project ismarginal and will not alter the value of the company substantially. d) Only the cash fl ows that arise as a result of the investment decision should be taken into account. e) The discount rate/cost of capital to be used in appraising a project should be the company’s cost of capital that iscalculated on the basis of the company’s risk profi le as well as that of the project. f) When an asset is sold at the end of the project the scrapping allowance or recoupment should also be taken intoaccount as a relevant cost when deciding if a project should be invested in or not. g) The changes in the working capital requirements, such as decrease in stock or debtors, should not be accounted for. Which of the above statement given are FALSE? 1. Statements (c), (f) and (g) 2. Statements (b), (c), (e) and (g) 3. Statements (a), (c) and (g) 4. Statements (a), (e) and (f) Question 13 Complete Mark 0.00 out of 1.00 Regarding working capital, which of the following statements are NOT ACCURATE ? b) A company can shorten its operating cycle by ensuring that its suppliers are paid early all the time, leading to potentialdiscounts from the suppliers. c) Net working capital also refers to net current assets. d) Negative working capital indicates poor management of working capital of the company. e) Negative working capital means that the company is insolvent, as it is not able to meet its short-term obligations. Choose the CORRECT combination. 1. Option (c) and (d) 2. Option (b), (c) and (d) 3. Option (a), (b), (d) and (e) 4. Option (a), (b) and (e) Question 14 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Question 15 Complete Mark 0.00 out of 1.00 Question 16 Complete Mark 1.00 out of 1.00 Calculate the creditors’ payment period. 1. 56 days 2. 55 days 3. 51 days 4. 61 days The following statement are presented to you: a) The interpretation, analysis and performance reporting of fi nancial information is a fi nancial management concern. b) Financial management is mainly concerned with short-term, medium-term and long-term managerial decisions. Thisincludes investments, fi nancing and control. c) The three primary activities of fi nancial management are controlling activities, investing activities and fi nancingactivities. d) The funding and investment activities of an entity also affect the dividend decisions. e) The required inputs for capital budgeting (investment decisions) are the weighted average cost of capital and futurecash fl ows f) A company can make use of both equity fi nance and debt fi nance for fi nancing. Which of the above statement are TRUE with regards to fi nancial management and the fi nance function? 1. Options (b), (c), (d), (e) and (f) 2. Options (a), (b) and (e) 3. Options (a), (c), (d) and (e) 4. Options (a), (b), (c), (d), (e) and (f) The following is considered part of the working capital for a project. Which statement is TRUE ? 1. Debtors and cash 2. Inventory, creditors, debtors and cash 3. Fixed assets 4. Cash only Question 17 Complete Mark 1.00 out of 1.00 Gravel Galore is a company owned by Josaf Mokele and Michale Molefi . They started 10 years ago on a open piece of landnext to Josaf’s home, in their own community to provide sand, stone, gravel, concrete and more to the local people to assistthem to gain access to these types of building material more easily. They became very successful quite fast and they were forced to start looking for a bigger piece of land. They started todiversify into more types and sort of material needed for building purposes. Josaf Mokele and Michale Molefi are starting to investigate the opportunities to buy even bigger land just outside Piet Retief.They are asking for your assistance in this regards. You can assume that the discount rate is 9% and cost of capital is 12%. The project will have the following cash fl ows: Year Cash Flow R’million 0 (200) 1 40 2 60 3 80 4 100 5 120 What is the IRR of the proposed Piet Retief project? 1. 42,85% 2. 7,00% 3. 23,29% 4. 15,24% Question 18 Complete Mark 0.00 out of 1.00 Pinkpan Restaurant Group (Pty) Limited is experiencing cash fl ow problems and is considering a change in credit termswhich should increase sales and ultimately improve cash fl ows. In order to implement it successfully, they are consideringextending a discount to debtors on the basis 5/30 net 60. Debtors currently take 45 days on average to pay their accountsand current annual credit sales are R2 350 000. It is anticipated that 40% of current debtors will take advantage of thediscount. The company expects sales to increase by R550 000 due to new sales to customers. New sales will result in 60% of thecustomers taking the discount and the balance will pay in 70 days. Inventory will increase by R120 000 and creditors andaccrual expenses will increase by R45 000. Increased sales will lead to a total of R22 000 bad debts. Pinkpan’s profi t marginis 20% and WACC is 10%. Calculate the annual cash fl ow benefi t of changing the credit policy. Ignore tax. 1. (R 862) 2. R20 000 3. R 9 852 4. R24 500 Question 19 Complete Mark 0.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 retail stores, the majority of which arein South Africa. Papraika Stores caters for different LSM groups and also has become one of South Africa’s most trustedbrands. The recent depreciation of the rand against world’s major currencies (exacerbated by local politics) has sent the JSE shareindex into a downward spiral and the shareholders of Papraika Stores Limited have also seen a sharp decline in theirinvestment value in the company. The statement of comprehensive income and the statement of fi nancial position of Papraika Stores Limited are providedbelow: Statement of comprehensive income for the year ending 31 January 2022 R million Notes 2022 Revenue a 23 746 Cost of merchandise (13 252) Gross profi t 10 494 Other operating income 1 533 Other income b 1 106 Trading expenses c (9 037) Net fi nance costs d (1 075) Profi t before taxation 3 021 Taxation f ( 864) Profi t for the year 2 157 Statement of fi nancial position as at 31 January 2022 R million Notes 2022 Non-current assets Property, plant and equipment 3 336 Other Investments b 4 736 Goodwill 378 Current assets Inventory 5 116 Trade and other receivables – retail 6 695 Prepayments 946 Cash and cash equivalents 888 Total assets 22 095 Capital and reserves Share capital 890 Non-distributable reserves 237 Retained income 8 774 Total equity 9 901 Non-current liabilities Long-term portion of interest-bearing debt d 5 322 Deferred taxation 435 Post-retirement medical benefi ts 217 Current liabilities Short-term portion of interest-bearing debt d 3 139 Short-term borrowings e 1 246 Trade and other payables 1 835 Total equity and liabilities 22 095 Weighted average number of shares (million) 207 Dividend – Interim (R million) 382 Dividend – Final (R million) 765 Number of retail outlets 3 125 Staff complement 21 981 Share price – closing (cents) 14 144 NOTES a) Of the R23 746 million sales made during the year, R16 622 million were on credit. Over the years, Papraika Stores hasmaintained healthy relations with its suppliers resulting in discounts received and fl exible terms of payment. Purchases forthe year amounted to R12 120 million of which 90% were sourced on credit. The gross profi t percentage in 2021 fi nancialyear was 32% (gross profi t for the 2021 fi nancial year amounted to R9 047 million). b) Other income relates to dividends received from investments (marketable securities) in listed retail companies outsidethe country. This has decreased by almost 4% from the previous years. c) Trading expenses comprise of: R million Trading expenses Depreciation and amortisation 465 Employee costs 3 210 Occupancy costs 2 043 Net bad debts 948 Other operating costs 2 371 9 037 d) Finance costs for the year amounted to R1 269 million and interest income received on credit bank balance was R194million. Interest-bearing debt at 31 January 2022 was R10 877 million. e) The short-term borrowings comprise of unsecured loans. Interest and administration costs on these loans are negligible. f) The corporate taxation rate is 28% and there were 365 days in the 2022 fi nancial year. Calculate the return on assets. 1. 18,5% 2. 13,5% 3. 13,9% 4. 13,8% Question 20 Complete Mark 1.00 out of 1.00 Gravel Galore is a company owned by Josaf Mokele and Michale Molefi . They started 10 years ago on a open piece of landnext to Josaf’s home, in their own community to provide sand, stone, gravel, concrete and more to the local people to assistthem to gain access to these types of building material more easily. They became very successful quite fast and they were forced to start looking for a bigger piece of land. They started todiversify into more types and sort of material needed for building purposes. Josaf Mokele and Michale Molefi are starting to investigate the opportunities to buy even bigger land just outside Piet Retief.They are asking for your assistance in this regards. You can assume that the discount rate is 9% and cost of capital is 12%. The project will have the following cash fl ows: Year Cash Flow R’million 0 (200) 1 40 2 60 3 80 4 100 5 120 Compute the profi tability index of the proposed Piet Retief project. 1. 1,49 2. 2,58 3. 3,58 4. 0,58