FIN4801 Assignment 4 (COMPLETE ANSWERS) 2026 - DUE 13 August 2026

FIN4801 Assignment 4 (COMPLETE ANSWERS) 2026 - DUE 13 August 2026; 100% TRUSTED Complete, trusted solutions and explanations. For assistance, Whats-App 0.8.1..2.7.8..3.3.7.2... Ensure your success with us...... Tracks Ltd., a manufacturer of various car products wants to estimate its funding requirements for the coming financial year. The company is utilizing its assets to their maximum capacity. In the current financial year the company achieved sales of R400 million on assets worth R10 000 million and liabilities of R900m. Its resulting net profit margin was 4% with 10% of profits being paid out as dividends. All assets and liabilities are considered spontaneous and increase in line with sales. It is expected that sales will grow by 20% in the coming year. Required: a. Determine the amount of funds the company will require in the coming year. (6) b. Briefly argue whether you believe the investment of additional funds would be worthwhile if one can invest funds and receive a return of 7%? (2) Tracks Ltd., a manufacturer of various car products wants to estimate its funding requirements for the coming financial year. The company is utilizing its assets to their maximum capacity. In the current financial year the company achieved sales of R400 million on assets worth R10 000 million and liabilities of R900m. Its resulting net profit margin was 4% with 10% of profits being paid out as dividends. All assets and liabilities are considered spontaneous and increase in line with sales. It is expected that sales will grow by 20% in the coming year. Required: a. Determine the amount of funds the company will require in the coming year. (6) b. Briefly argue whether you believe the investment of additional funds would be worthwhile if one can invest funds and receive a return of 7%? (2) Tyreshop Ltd sells tyres and wheels on credit only. The management of the company estimated that it could increase sales by offering better credit terms. Currently, the days sales outstanding or average collection period is 14 days. It is expected that this will change to 30 days under the new standards. Sales are expected to increase from R400m to R430m. Discounts are not offered and the company currently has bad debts of 1% which they expect will increase to 2% under the new terms. The company can borrow short term funds at a rate of 7% and has a gross profit margin of 8%. What would the net effect of changing its credit standards on its net profit be? Blankets Ltd is preparing a cash budget for the last six months of 2026. The company’s financial manager has gathered all of its sales estimates and past sales data for the next six months and the past four months, respectively. Sales over the previous four months were as follows: March April May June R200 000 R280 000 R450 000 R560 000 Sales for the last 6 months of 2026 were estimated as follows: July August September October November December R650 000 R550 000 R300 000 R100 000 R90 000 R50 000 50% of sales are cash while the remainder are on credit. The ageing analysis indicates that on credit sales, payments are usually made as follows for any given month’s sales: Tyreshop Ltd sells tyres and wheels on credit only. The management of the company estimated that it could increase sales by offering better credit terms. Currently, the days sales outstanding or average collection period is 14 days. It is expected that this will change to 30 days under the new standards. Sales are expected to increase from R400m to R430m. Discounts are not offered and the company currently has bad debts of 1% which they expect will increase to 2% under the new terms. The company can borrow short term funds at a rate of 7% and has a gross profit margin of 8%. What would the net effect of changing its credit standards on its net profit be? Blankets Ltd is preparing a cash budget for the last six months of 2026. The company’s financial manager has gathered all of its sales estimates and past sales data for the next six months and the past four months, respectively. Sales over the previous four months were as follows: March April May June R200 000 R280 000 R450 000 R560 000 Sales for the last 6 months of 2026 were estimated as follows: July August September October November December R650 000 R550 000 R300 000 R100 000 R90 000 R50 000 50% of sales are cash while the remainder are on credit. The ageing analysis indicates that on credit sales, payments are usually made as follows for any given month’s sales: 1 month 2 months 3 months 20% 50% 30% Every month, the company has purchases and other expenses that equal 50% of its total sales for the month. The company also has fixed costs of R250 000 per month. In July, the company expects to pay a bonus to staff which will cost R500 000 in total, while in December, new equipment worth R1 000 000 will be paid for. The cash balance at the start of July is R1 000 000. The company can finance any cash deficits using a line of credit at a cost of 1% of the outstanding balance of the previous month, paid during the next month. Required: Compile a cash budget for Blankets Limited for July to December 2026 and clearly indicate any financing costs. (16) Provide a brief overview of the company’s cash flow situation over the period and provide your opinion on why it varies over the period. (2) Zen Pty Ltd is expecting a cash shortfall of R200 000 in March and one of R400 000 in April. The financial manager of the company has arranged for an overdraft facility with a local bank at a cost of 12% per annum, paid on the outstanding balance at the end of each month. It is expected that during May, the company will receive a large payment and will repay the balance on the facility and not experience another shortfall in the financial year. Determine the total cost of financing the shortfall over March and April.