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FIN2601 Assignment 1 (COMPLETE ANSWERS) Semester 1 2025 (185354) - DUE 17 April 2025; 100% TRUSTED Complete, trusted solutions and explanations $2.60
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FIN2601 Assignment 1 (COMPLETE ANSWERS) Semester 1 2025 (185354) - DUE 17 April 2025; 100% TRUSTED Complete, trusted solutions and explanations

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  • Course
  • Financial Management
  • Institution
  • University Of South Africa
  • Book
  • Principles of Managerial Finance

FIN2601 Assignment 1 (COMPLETE ANSWERS) Semester 1 2025 (185354) - DUE 17 April 2025; 100% TRUSTED Complete, trusted solutions and explanations

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  • February 12, 2025
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  • 2024/2025
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,FIN2601 Assignment 1 (COMPLETE ANSWERS) Semester 1 2025
(185354) - DUE 17 April 2025; 100% TRUSTED Complete, trusted
solutions and explanations…. Ensure your success with us.

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)

, Step 1: Gross Profit Margin

The Gross Profit Margin measures the percentage of revenue that
exceeds the cost of goods sold (COGS). It's an indicator of how
efficiently the company produces or delivers its goods.

𝐹𝑜𝑟𝑚𝑢𝑙𝑎:

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛
= 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡𝑆𝑎𝑙𝑒𝑠 × 100\𝑡𝑒𝑥𝑡{𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛}
= \𝑓𝑟𝑎𝑐{\𝑡𝑒𝑥𝑡{𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡}}{\𝑡𝑒𝑥𝑡{𝑆𝑎𝑙𝑒𝑠}}
\𝑡𝑖𝑚𝑒𝑠 100𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛
= 𝑆𝑎𝑙𝑒𝑠𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 × 100

𝐹𝑜𝑟 𝟐𝟎𝟐𝟑:

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 = 1,200,0004,000,000 × 100
= 30%\𝑡𝑒𝑥𝑡{𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛}
= \𝑓𝑟𝑎𝑐{1,200,000}{4,000,000} \𝑡𝑖𝑚𝑒𝑠 100
= 30\%𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛
= 4,000,0001,200,000 × 100 = 30%

𝐹𝑜𝑟 𝟐𝟎𝟐𝟒:

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 = 1,400,0006,000,000 × 100
= 23.33%\𝑡𝑒𝑥𝑡{𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛}
= \𝑓𝑟𝑎𝑐{1,400,000}{6,000,000} \𝑡𝑖𝑚𝑒𝑠 100
= 23.33\%𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛
= 6,000,0001,400,000 × 100 = 23.33%


𝑺𝒕𝒆𝒑 𝟐: 𝑺𝒐𝒍𝒗𝒆𝒏𝒄𝒚 𝑹𝒂𝒕𝒊𝒐

𝑇ℎ𝑒 𝑺𝒐𝒍𝒗𝒆𝒏𝒄𝒚 𝑹𝒂𝒕𝒊𝒐 𝑚𝑒𝑎𝑠𝑢𝑟𝑒𝑠 𝑡ℎ𝑒 𝑐𝑜𝑚𝑝𝑎𝑛𝑦’𝑠 𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑡𝑜 𝑚𝑒𝑒𝑡 𝑖𝑡𝑠 𝑙𝑜𝑛𝑔
− 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 𝑜𝑏𝑙𝑖𝑔𝑎𝑡𝑖𝑜𝑛𝑠. 𝐼𝑡 𝑖𝑠 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑑 𝑏𝑦 𝑑𝑖𝑣𝑖𝑑𝑖𝑛𝑔 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 𝑏𝑦 𝑡𝑜𝑡𝑎𝑙

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