,FIN2601 Assignment 1 (COMPLETE ANSWERS)
Semester 1 2025 (185354) - DUE 17 April 2025;
100% TRUSTED Complete, trusted solutions and
explanations.
MULTIPLE CHOICE,ASSURED EXCELLENCE
QUESTION 1 [18 MARKS] Read the information provided and
then answer the questions that follow. Indicate all the steps in
your calculations – it is NOT enough to provide only a final
answer. Jungle Build Projects is a relatively young civil
engineering company based in Rustenburg, North West. A
month ago, Sherman Alexander Hemsley was appointed as the
financial manager of the company. He received the company's
yearly financial statistics and was requested to prepare a report
on the success of the business. The report must be submitted to
management. Extract from the statement of comprehensive
income for 31 December 2024 2023 2024 Sales R4 000 000 R6
000 000 FIN2601/101/1/2025 5 Cost of goods sold R2 800 000
R4 600 000 Gross profit R1 200 000 R1 400 000 Administrative
expenses R520 000 R600 000 Earnings before interest and tax
(EBIT) R680 000 R800 000 Extract from the statement of
financial position as of 31 December 2024 2023 2024 Trade and
other receivables R440 000 R820 000 Inventories R460 500
R380 000 Cash and cash equivalents R299 500 R300 000
Current assets R1 200 000 R1 500 000 Total assets R5 500 000
R7 000 000 Total liabilities R2 900 000 R5 000 000 Take the
following into consideration: a) The below table of ratios
,provided is applicable for the year 2023 and 2024 b) Assume a
365-day year for the calculations. c) Apply year end-based
figures for inventory. Use the information above to answer the
following questions: 1.1 Use the financial statement above to
calculate the following ratios for 2023 and 2024: (16 marks)
Ratio 2023 2024 6 Gross profit margin Solvency Average
collection period Total asset turnover Debt ratio You are given
the following information: 1) The Treasury Bill rate is 5%. 2) The
required return on the market is 8%. 3) The expected growth
rate for the company is 4%. 4) The last dividend paid was R0,80.
5) The beta value is 1,3. Page 113 of 116 Now, assume the
following changes occur: a) The inflation premium drops by 1%.
b) An increased degree of risk aversion causes the required
return on the market to go to 10% after adjustment for the
changed inflation premium. c) The expected growth rate
increases to 6%. d) The beta value rises to 1,5. What would the
change Based on your findings, highlight the main differences
between the years 2023 and 2024 under the following headings
provided. Provide possible reasons by explaining any one of
them: Da Gama (Pty) Ltd has a current dividend of R3. Analysts
expect that the dividend will grow at a rate of 25% per annum
for the next three years. It will then grow at a constant 10% per
annum. The company’s cost of equity capital is estimated to be
15%. What is the current share price of Da Gama? Profitability
ratios Debt ratios Activity ratios Ensure that your analysis
includes a detailed comparison of the ratios for both years and
provides a clear explanation for the observed differences. Alpha
, Pharmaceuticals Economic Probability Return Page 66 of 116
condition Recession 0.35 12 Mid recession 0.25 20 Boom 0.40
28 Beta Engineering Economic condition Probability Return
Recession 0.35 6 Mid recession 0.25 16 Boom 0.40 24
QUESTION 15 The expected return for Alpha Pharmaceuticals
and Beta Engineering is …
ANS 1;
Here’s a breakdown of how to approach this question step by
step:
QUESTION 1.1 - Financial Ratio Calculations (16 Marks)
We need to calculate the following ratios for 2023 and 2024
using the financial statements provided:
1. Gross Profit Margin
Gross Profit Margin=(Gross ProfitSales)×100\text{Gross Profit
Margin} = \left( \frac{\text{Gross Profit}}{\text{Sales}} \right) \
times 100Gross Profit Margin=(SalesGross Profit)×100
For 2023:
(1,200,0004,000,000)×100=30%\left( \frac{1,200,000}
{4,000,000} \right) \times 100 = 30\%(4,000,0001,200,000
)×100=30%
For 2024:
Semester 1 2025 (185354) - DUE 17 April 2025;
100% TRUSTED Complete, trusted solutions and
explanations.
MULTIPLE CHOICE,ASSURED EXCELLENCE
QUESTION 1 [18 MARKS] Read the information provided and
then answer the questions that follow. Indicate all the steps in
your calculations – it is NOT enough to provide only a final
answer. Jungle Build Projects is a relatively young civil
engineering company based in Rustenburg, North West. A
month ago, Sherman Alexander Hemsley was appointed as the
financial manager of the company. He received the company's
yearly financial statistics and was requested to prepare a report
on the success of the business. The report must be submitted to
management. Extract from the statement of comprehensive
income for 31 December 2024 2023 2024 Sales R4 000 000 R6
000 000 FIN2601/101/1/2025 5 Cost of goods sold R2 800 000
R4 600 000 Gross profit R1 200 000 R1 400 000 Administrative
expenses R520 000 R600 000 Earnings before interest and tax
(EBIT) R680 000 R800 000 Extract from the statement of
financial position as of 31 December 2024 2023 2024 Trade and
other receivables R440 000 R820 000 Inventories R460 500
R380 000 Cash and cash equivalents R299 500 R300 000
Current assets R1 200 000 R1 500 000 Total assets R5 500 000
R7 000 000 Total liabilities R2 900 000 R5 000 000 Take the
following into consideration: a) The below table of ratios
,provided is applicable for the year 2023 and 2024 b) Assume a
365-day year for the calculations. c) Apply year end-based
figures for inventory. Use the information above to answer the
following questions: 1.1 Use the financial statement above to
calculate the following ratios for 2023 and 2024: (16 marks)
Ratio 2023 2024 6 Gross profit margin Solvency Average
collection period Total asset turnover Debt ratio You are given
the following information: 1) The Treasury Bill rate is 5%. 2) The
required return on the market is 8%. 3) The expected growth
rate for the company is 4%. 4) The last dividend paid was R0,80.
5) The beta value is 1,3. Page 113 of 116 Now, assume the
following changes occur: a) The inflation premium drops by 1%.
b) An increased degree of risk aversion causes the required
return on the market to go to 10% after adjustment for the
changed inflation premium. c) The expected growth rate
increases to 6%. d) The beta value rises to 1,5. What would the
change Based on your findings, highlight the main differences
between the years 2023 and 2024 under the following headings
provided. Provide possible reasons by explaining any one of
them: Da Gama (Pty) Ltd has a current dividend of R3. Analysts
expect that the dividend will grow at a rate of 25% per annum
for the next three years. It will then grow at a constant 10% per
annum. The company’s cost of equity capital is estimated to be
15%. What is the current share price of Da Gama? Profitability
ratios Debt ratios Activity ratios Ensure that your analysis
includes a detailed comparison of the ratios for both years and
provides a clear explanation for the observed differences. Alpha
, Pharmaceuticals Economic Probability Return Page 66 of 116
condition Recession 0.35 12 Mid recession 0.25 20 Boom 0.40
28 Beta Engineering Economic condition Probability Return
Recession 0.35 6 Mid recession 0.25 16 Boom 0.40 24
QUESTION 15 The expected return for Alpha Pharmaceuticals
and Beta Engineering is …
ANS 1;
Here’s a breakdown of how to approach this question step by
step:
QUESTION 1.1 - Financial Ratio Calculations (16 Marks)
We need to calculate the following ratios for 2023 and 2024
using the financial statements provided:
1. Gross Profit Margin
Gross Profit Margin=(Gross ProfitSales)×100\text{Gross Profit
Margin} = \left( \frac{\text{Gross Profit}}{\text{Sales}} \right) \
times 100Gross Profit Margin=(SalesGross Profit)×100
For 2023:
(1,200,0004,000,000)×100=30%\left( \frac{1,200,000}
{4,000,000} \right) \times 100 = 30\%(4,000,0001,200,000
)×100=30%
For 2024:
