Prepare a cash budget statement

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Reference no: EM13573

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?

4.5.2 To whom should an audit report addressed to and why?

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

Additional information:

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

Advertising per month R3 600

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.

Reference no: EM13573

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