### Prepare a cash budget statement

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Question 1

Gabi wishes to purchase an apartment in Berea Johannesburg which is situated in a quiet street. The purchase price, including costs, is R355 000 and she wishes to get a 100% mortgage bond at an interest rate of 6%, interest compounded monthly. The term of the loan is 20 years. Property economists have suggested that property values are expected to rise at a rate of 9% per year. Gabi will be able to rent out the apartment after costs at a rate of R2 000  per month. Interest and rent are payable at the beginning of each month.

Required:

1.1 Evaluate the expected value of the apartment in 20 years' time.

1.2 What is the mortgage loan repayment at the beginning of each month?

1.3 What is the net amount Gabi has to pay in each month, if any?

Question 2

2.1 Differentiate between Ordinary shares and Preference shares.

2.2 Illustrate three characteristics that any security for a loan should have.

Question 3

The expected return and risk involved in making an investment are important factors considered by investors. The expected return of a business can be influenced by many factors. Past performance is considered to reflect expected future performance and an equal probability of 25% is assumed for all returns. Based on the analysis of past returns and forecasting, the following information is available for returns on two shares

listed on the stock exchange:

 Year Mazebe Baduna 2009 0.20 0.16 2010 0.28 0.12 2011 0.36 0.10 2012 0.12 0.18

Required:

3.1 Calculate the average return for each of the two shares.

3.2 Calculate the risk involved by use of the standard deviation of each of the two shares.

3.3 Calculate the co-efficient of variation of each of the two shares.

Question 4

Study the following Goget financial statements and answer the questions below.

Statement of Comprehensive Income for the year ended 31 Dec 2012

31 Dec 11                     31 Dec 12

Sales                                                             4 005 153                     4 440 654

Cost of sales                                                 1 968 238                     2 105 827

Gross Profit                                                   2 036 915                     2 334 827

 Expenses 992 086 1 134 525 Selling & Distribution costs 421 969 499 931 Marketing expenses 130 026 163 708 Research and development 64 472 65 287

Fixed and admin expenses                                       375 619                                           405 599

 Operating Profit 1 044 829 1 200 302 Finance Income 38 680 59 288 Finance costs -56 411 -40 473 Dividend Income 9 619                           10 647 Profit before tax and abnormal items 1 036 717                       1 229 764 Abnormal item -                        269 000 Taxation 246 835                         317 536 Net Profit after tax 789 882                        643 228

Dividend                                                                                         -                                   -

Retained Earnings                                                          789 882                        643 228

Capital and Reserves

 Issued Share Capital 17 363 17 365 Share premium 1 203 854 1 190 290 NDR 77 494 349 061 Retained Earnings 1 001 942                                     1 357 939 Total shareholders Equity 2 300 653                                        2 914 655 Non-controlling interest 24 943                                       158 685

Total Equity                                                              2 325 596            3 073 340

 Long-term Loan   Other long-term liabilities 117 076 20 981 453 830        39 769 Non-Current Liabilities 138 057 493 599 Bank Overdraft 221 - Trade payables 630 743 957 922 Short term borrowings 194 405 126 787 Provisions 68 752 84 464 Taxation payable 29 726 21 233 Current Liabilities 923 847 1 190 406 Total Equity and Liabilities 3 387 500 4 757 345 ASSETS Property plant and Equipment 599 746 857 471 Deferred Tax 20 030 23 967 Investments 138 037 139 012 Investments in Associates 12 200 12 200

Intangible assets                                                                        304 240                       424 149

Non-Current Assets                                                                          1 074 253                 1 456 799

4.1 Calculate and comment on any three liquidity of the Goget company.

4.2 Calculate and comment any three profitability ratios of the company.

4.3 Comment on the solvency of Goget.

4.4 Calculate and comment on any three turnover ratios.

4.5 Concerning the Auditor's report answer the following:

4.5.1 Who is responsible for the preparation of the Annual financial statements?

4.5.3 What is the difference between a qualified and unqualified audit opinion.

4.3 Comment on the solvency of Goget.

4.4 Calculate and comment on any three turnover ratios.

4.5 Concerning the Auditor's report answer the following:

 4.5.1 Who  is  responsible  for  the  preparation  of the Annual financial statements? (1) 4.5.2   To whom should an audit report addressed to and why?   (2)

4.5.3 What is the difference between a qualified and unqualified audit opinion.

Question 5

Loudfire Safaris have requested you to prepare a cash budget for the period ending 31 March 2013. The following projections have been made for the next 4 months

 December (Rand) January (Rand) February (Rand) March (Rand) Credit Purchases 10 000 15 000 18 000 25 000 Credit Sales 25 000 35 000 40 000 55 000

60% of the sales are collected in the month of the sale and the balance the following month.

30% of the purchases are paid for in the month of purchase, 50% in the following month and the balance in the month after.

Monthly salaries: R12 500

The debit balance at the bank at end of December was R 5 000.

Required:

Prepare a cash budget statement to ascertain the cash position at the end of every month for Loudfire Safaris.

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