FIN2601 Assignment 1 Semester 1 Memo | Due 17 April 2025

FIN2601 Assignment 1 Semester 1 Memo | Due 17 April 2025. All questions answered. 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 800 OOO R4 600 OOO Gross profit RI 200 OOO RI 400 OOO 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 Trade and other receivables R440 OOO R820 OOO Inventories R460 500 R380 000 Cash and cash equivalents R299 500 R300 000 Current assets RI 200 000 RI 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 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 3) The expected growth rate for the company is 4%.4) The last dividend paid was RO,80. 5) The beta value is 1 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