E. Extract from the Cash Budget for April and May 2021:…
E. Extract from the Cash Budget for April and May 2021: APRIL R MAY R Cash sales 78 300 (i) Loan received 316 800 0 Payment to creditors 134 583 (ii) Salary of manager 15 000 16 500 Wages of sales staff 38 400 38 400 Operating expenses ? (iii) Drawings 18 000 (iv) Water and electricity 15 400 16 632 Deposit on new equipment 12 600 0 Instalment on new equipment 0 (v) Instalment on loan 0 (vi) Interest on loan 0 2 310
Read DetailsQUESTION 3: INTERPRETATION OF FINANCIAL INFORMATION (36 mark…
QUESTION 3: INTERPRETATION OF FINANCIAL INFORMATION (36 marks; 22 minutes) 3.1 CONCEPTS REQUIRED: Concepts relating to companies are given in COLUMN A and descriptions in COLUMN B. Choose a description from COLUMN B that matches a concept in COLUMN A. Write only the letter (A–D) next to the question number (3.1.1 – 3.1.4) in the ANSWER BOOK. COLUMN A (CONCEPT) COLUMN B (EXPLANATION) 3.1.1 Liquidity A. Indicates the benefit that the owners receive from their investment in the business. 3.1.2 Solvency B. Indicates whether the business can pay off immediate debts. 3.1.3 Gearing C. Indicates the extent to which a business is financed by borrowed capital. 3.1.4 Return on equity D. Indicates whether the business will be able to pay off all its debts. (4) 3.2 MALINDE LTD The information presented relates to the financial year ended 30 April 2020. REQUIRED: 3.2.1 Comment on the overall liquidity position of the company. Quote THREE relevant financial indicators (with figures). (12) 3.2.2 The directors decided to change the dividend pay-out policy in 2020. · Provide calculations that indicate the policy change. · Explain the effect of this change of policy on the company. State TWO points. (8) 3.2.3 One of the directors feels that the company should pay back the loan as soon as possible. What are your views about this? Quote and explain TWO relevant financial indicators with figures. (6) 3.2.4 Explain why the shareholders are satisfied with the market price of the shares on the JSE. Quote figures/financial indicators. (6)
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