MAC3702 Application of Financial Management Techniques Compulsory Assignment 01 for The Early Completion Programme (2026 Update)

APPLICATION OF FINANCIAL MANAGEMENT TECHNIQUES COMPULSORY ASSIGNMENT 01 FOR THE EARLY COMPLETION PROGRAMME

QUESTION 1 Which of the following statement(s) is/are true? a) A higher inventory turnover should be desirable as it indicates that the company is able to convert its inventory into sales more quickly. b) An improvement in asset turnover leads to increased profitability as the asset turnover ratio is a function of sales. c) Increase in inventory turnover would translate to a decrease in inventory days. d) Acid-test ratio is not applicable where the company does not sell goods on credit). Choose the correct combination: 1. Statements (a) and (c) 2. Statements (b) and (c) 3. Statements (a), (c) and (d) 4. Statements (c) and (d) QUESTION 2 Which of the following statement(s) is/are more accurate? a) Companies with a lower dividend cover run a risk of not having enough earnings to cover ordinary shareholders’ dividends. b) Both interim and final dividends should be taken into account when calculating the dividend cover at the end of the year. c) Companies in their growth/expansion phase are likely to have a lower dividend pay-out ratio. d) South African companies may declare a lower dividend in an effort to cut down on the dividend taxes they pay. e) An investor’s return on a particular share may consist of the growth in the share price and the dividend yield. Choose the correct combination: 1. Statements (a), (c) and (e) 2. Statements (b), (c) and (e) 3. Statements (b) and (c) 4. Statements (a) and (d) QUESTION 3 Which of the following statement(s) is/are true? a) Effective tax rate measures the effectiveness of the company in planning its tax affairs. b) Deferred tax can be cited as one of the reasons for differences between the effective tax rate and the corporate tax rate. c) Value added tax and import duties will lead to a higher effective tax rate. d) Late tax payments will lead to a higher effective tax rate. 2 lOMoARcPSD|8436517 ASSIGNMENT 1_ECP_2021 Choose the correct combination: 1. Statements (b), (c) and (d) 2. Statements (a) and (d) 3. Statements (a), (b) and (d) 4. Statements (a) and (c) QUESTION 4 Which of the following statement/s regarding the asset turnover ratio is/are more accurate? a) The ratio shows how many rands of sales are generated from each rand invested in the assets of the business. b) The ratio indicates effective use of property, plant and equipment in generating revenue for the business. c) The ratio shows which assets are more effective in generating revenue for the business. d) The ratio may be used to indicate possible impairments in the assets of the business. e) The ratio indicates the effectiveness of the assets in producing profits for the business. Choose the correct combination: 1. Statements (a), (b) and (d) 2. Statements (b), (c) and (e) 3. Statements (a) and (d) 4. Statements (b) and (c) QUESTION 5 Regarding working capital, which of the following statement/s is/are more accurate? a) Net working capital is inventory, plus trade receivables, plus cash and minus trade and other payables. b) A company can shorten its operating cycle by delaying payments to its suppliers, without necessarily incurring late payment penalties. c) Net working capital also refers to net current assets. d) Negative working capital indicates poor management of working capital of the company. e) Negative working capital means that the company is insolvent, as it is not able to meets its short-term obligations. Choose the correct combination. 1. Statements (a), (b), (c) and (d) 2. Statements (b) and (c) 3. Statements (a), (c), (d) and (e) 4. Statements (a) and (d) 3 lOMoARcPSD|8436517 ASSIGNMENT 1_ECP_2021 QUESTION 6 The following amounts are extracted from the statement of financial position at 31 March 2021 of Kulule Ltd: Total equity and liabilities Equity Current liabilities What is the debt ratio of Kulule Ltd? 1. 50,00% 2. 42,59% 3. 7,41% 4. 57,41% USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 7 – 10 The following are the financial statements of Nutuli Ltd, a company that sells industrial cleaning equipment: Statement of financial position at 31 March 2021 ASSETS Non-current assets Property, plant and equipment Other operating assets (not depreciable) Current assets Inventory Trade and other receivables Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Equity Ordinary share capital Retained income Non-current liabilities Long-term loans Current liabilities Trade and other payables Short-term portion R 3 630 000 2 670 000 960 000 1 695 000 1 260 000 390 000 45 000 5 325 000 2 260 000 1 500 000 760 000 2 400 000 2 400 000 665 000 395 000 270 000 TOTAL EQUITY AND LIABILITIES 4 lOMoARcPSD|8436517 ASSIGNMENT 1_ECP_2021 Statement of profit and loss and other comprehensive income for the year ended 31 March 2021 R Revenue Cost of sales Gross profit Operating expenses Distribution costs Administration costs Other operating expenses Operating profit before other income, interest and tax Other operating income Earnings before interest and tax Finance costs Profit before taxation Income tax expense Net profit QUESTION 7 What is the debt ratio for Nutuli Ltd for 2021? 1. 50,14% 2. 73,55% 3. 23,30% 4. 57,56% QUESTION 8 What is the gearing ratio for Nutuli Ltd for 2021? 1. 53,25% 2. 52,55% 3. 54,16% 4. 57,56%