FIN3703 Assignment 2 Due 7 September 2024

The Question Dalton Ltd – is the third largest South African manufacturer of high-quality JoJo tanks with its head offices situated in Midrand. The company owns four branches: one in Naturena, the second in Ennerdale, the third in Pachuca and the fourth in Roodepoort. Although the market for JoJo tanks has been expanding extremely well, Dalton could not share in this growth due to the technical challenges experienced with the current machine. To increase production and sales, the company is considering embarking on an extensive marketing campaign, offering better credit terms and replacing the current injection moulding machine with a more technically advanced model which will cost the company R3 000 000. In funding the replacement project, a five-year loan will be raised from standard bank at a floating interest rate of 11.75% per annum. The replacement requires that the company increases its working capital by R240 000. In financing the working capital, the company will secure a total revolving credit loan with a limit of R240 000 from Capitec bank, at a floating interest of 12.2% per annum. DALTON Ltd TREASURER As a Unisa final year treasury management student, you have been appointed as a treasurer by Mac Rebert, the chief executive officer (CEO) at Dalton Ltd head office. KEY PERFOMANCE AREA The human resources department provided you with detailed documents that among others, list the following treasurer key performance agreement areas (KPAs): ▪ Advise on the recruitment of treasury department personnel. ▪ ensure the implementation of GAAP. ▪ provide strategic leadership in the treasury office of the company. ▪ set overall financial strategies, goals and objectives for the company. ▪ Manage cash and liquidity. ▪ Establish and manage an excellent banking relationship. ▪ Manage corporate treasury risk. FIRST MEETING WITH THE CEO Mac Robert invited you to a special briefing session to discuss the funding and sub-risk policies below: DALTON’S FUNDING POLICY The funding strategy shall be submitted to board of directors for approval before the commencement of the financial year for which it is applicable and shall be reviewed for amendments should the need arise. The funding strategy shall outline the borrowing requirement for the financial year in question and shall outline the different funding sources the company may utilize to meet it