,FIN3703 Assignment 2 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 7 September 2024 ; 100%
TRUSTED Complete, trusted solutions and
explanations.
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
its borrowing requirement. The borrowing requirement consists
of short-term and long-term funding needs of the company. The
following funding sources are authorized by the board of
directors: MONEY MARKET CAPITAL MARKET ▪ Commercial
paper ▪ Bank overdraft ▪ Revolving credit ▪ Treasury bills ▪ Bank
long-term loans DALTON’S RISK TREASURY POLICY There are
various risks facing Dalton Ltd on regular basis which
necessitate vigilance and precautionary measures. Some of the
risks include liquidity risk and interest rate risk. It is the
company’s policy that identified risks must be managed within
the principles of risk mitigation strategies laid by the Board of
Semester 2 2024 - DUE 7 September 2024 ; 100%
TRUSTED Complete, trusted solutions and
explanations.
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
its borrowing requirement. The borrowing requirement consists
of short-term and long-term funding needs of the company. The
following funding sources are authorized by the board of
directors: MONEY MARKET CAPITAL MARKET ▪ Commercial
paper ▪ Bank overdraft ▪ Revolving credit ▪ Treasury bills ▪ Bank
long-term loans DALTON’S RISK TREASURY POLICY There are
various risks facing Dalton Ltd on regular basis which
necessitate vigilance and precautionary measures. Some of the
risks include liquidity risk and interest rate risk. It is the
company’s policy that identified risks must be managed within
the principles of risk mitigation strategies laid by the Board of
