STUDY UNITS COVERED : STUDY UNITS 1-5 & 7 CHAPTERS COVERED : CHAPTERS 1-5, 7, 8, 9 & 18. DUE DATE : 3:00 p.m. 18 March 2014

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1 Page 1 of 7 ASSIGNMENT 1 ST SEMESTE : FINANCIAL MANAGEMENT STUDY UNITS COVEED : STUDY UNITS 1-5 & 7 CHAPTES COVEED : CHAPTES 1-5, 7, 8, 9 & 18 DUE DATE : 3:00 p.m. 18 March 2014 TOTAL MAKS : 100 INSTUCTIONS TO CANDIDATES FO COMPLETING AND SUBMITTING ASSIGNMENTS The complete Instructions to Students for Completing and Submitting Assignments must be collected from any IMM GSM office, the relevant IMM GSM recognised Additional Tuition Centre or can be downloaded from the IMM GSM website. It is essential that the complete instructions be studied prior to commencing your assignment. The following points highlight only a few important notes. 1. You are required to submit ONE assignment per subject. 2. The assignment will contribute 20% towards the final examination mark, and the other 80% will be made up from the examination, however the examination papers will count out of 100%. 3. Although your assignment will contribute towards your final examination mark, you do not have to earn credits for admission to the examinations; you are automatically accepted on registering for the exam. 4. Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname, student number and subject at the top of each page. 5. The IMM GSM requires assignments to be presented on plain A4 paper. You must show all working calculations, including and where appropriate multiple-choice working calculations. 6. A separate assignment cover, which is provided by the IMM GSM, must be attached to the front cover of each assignment. 7. etain a copy of each assignment before submitting, in case the original does not reach the IMM GSM. 8. The assignment due date refers to the day up to which assignments will be accepted for marking purposes. The deadline is 3:00 p.m. on 18 March Late assignments will be accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00 p.m. on 18 March 2014 and up to 5:00 p.m. the following day after which no assignments will be accepted. 9. If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot accept responsibility for the return of the assignment. It may even result in your assignment not being marked. esults will be available on the IMM GSM website: on Friday, 2 May 2014.

2 Page 2 of 7 Answer ALL the questions QUESTION 1 [17] 1.1 You are the marketing manager at a registered company and the company secretary has asked your opinion on the corporate branding of the annual report. What six (6) documents would you expect to find in the annual report? (3) 1.2 Discuss why knowledge of accounting and financial processes is important for marketers by identifying the four (4) elements of financial analysis and explain how they assist the marketer in his/her work. (8) 1.3 The Articles and Memorandum of Association documents are often referred to as the constitution of a company. In terms of the Companies Act 71 of 2008, as amended, what have these documents been replaced by? (1) 1.4 The Statement of Financial Position of a company can be expressed in a mathematical equation. What is the equation and which elements represent the source of funds for a company? (2) 1.5 Define an asset in your own words. (1) 1.6 What is a current liability? What possible benefit is it to an organisation? (2) QUESTION 2 [15] You are the head office brand manager for a retail franchise chain. Your main work is to research and produce posters depicting the menus available in the franchise stores. Once produced, these posters are sold to the franchisees. Due to the fluctuation of costs it is most prudent that you keep a stock record based on the FIFO cost. Below are the records obtained for February 2013: 1 Feb 2013 stock on hand: 200 posters at each. 3 February 600 posters received at each. 5 February 300 posters sold to a regional franchisee at February 200 posters received at each. 11 February 400 sold to a franchisee at each. 20 February 200 posters received at each. 25 February 120 posters received at each. 26 February 200 posters issued to a franchisee at February 20 posters were returned to supplier from the last batch due to smudged ink.

3 Page 3 of 7 EQUIED 2.1 Prepare a FIFO (First-In-First-Out) based stock card of the transactions based on the format below: Date eceipts Issues Balance Feb Qty Price Cost Value Qty Price Cost Value Qty Price Cost Value Indicate the sales, cost of sales and gross profit based on the information for February 2013 and your calculations above. (5) QUESTION 3 [8] An item of machinery, with a cost of , is depreciated using the reducing balance method. The depreciation rate was correctly calculated to be 27.5%. Based on these details complete the following table to the nearest whole number: Year Cost Annual Depreciation Accumulated Depreciation Book value / Carrying value QUESTION 4 [6] You are provided with the following transactions of Eeezy Electrical for February 2013: a. On 1 st February, George Eeezy started the business with in cash which was deposited into a bank account in the name of the business on the same day. b. George transferred a vehicle, with a book value of , into the name of the business as part of his capital contribution (on 1 st February). c. Two days later he took a loan from Xact Bank to the value of The funds/proceeds from the loan were received the same day. d. On 5 th February he bought tools to the value of and a stepladder for These items, to be used as his electrical equipment, were paid for in cash. e. On 7 th February he repaired an air-conditioning system for a customer and received cash in exchange for his services. (10)

4 Page 4 of 7 f. Lexis Ltd requested George to install a security lighting system for for which they paid him upfront on the day he performed the installation on 10 th February. It was agreed that Gamma limited would settle the balance at the end of March. g. George hired a hydraulic lift on 11 th February to assist him with a job. He paid the hiring fee of in cash. EQUIED Show the effect of each of the transactions, relating to Eeezy Electrical, on the elements of the balance sheet. Note: Use the headings below as a guide. You need only indicate the amount under the relevant element heading. Be sure to include a +/- to indicate the effect on each element. You are reminded of the concept of duality spoken of in your learning material. The first transaction has been done for you as an example. Assets = Equity + Liabilities a) QUESTION 5 [24] The following financial statements of Kalway Ltd have been provided: Statement of Comprehensive Income for the year ended 31 st January 2013 Sales Cost of sales Gross profit Other income Operating expenses (47 000) Advertising (10 000) Operating profit Investment income Financing costs (8 500) Profit before tax Tax (9520) Profit after tax Preference share dividends (2160) Earnings attributable to ordinary shareholders Ordinary dividends (18 000) etained income (for the year) 4 320

5 Page 5 of 7 Statement of Financial position as at 31 st January Assets Non-current Assets Property at cost Plant and equipment at cost Accumulated depreciation (22 000) Investments in other companies shares Current Assets Inventory Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Total Equity Ordinary share capital ( shares) eserves etained earnings Preference shares Non-Current Liabilities Long term debt Current Liabilities Trade payables Tax payable Dividends payable Short term loan Total Equity and Liabilities Note: Credit purchases amounted to Credit sales amounted to EQUIED 5.1 Calculate the following ratios based on a 360-day year (rounding relevant answers to two decimal places): atio Gross profit margin Acid test ratio Operating profit margin Debtors collection period Mark up % Creditors payment period Total asset turnover eturn on equity Stock turnover Advertising to sales ratio Current ratio Earnings per share NOTE: You must be sure to show your answer in the correct format by indicating a %, days, times, cents etc. in order to be awarded the marks. (24)

6 Page 6 of 7 QUESTION 6 [20] You are provided with the following transactions of Mango Buffin (MB), an entertainer, for the two months of November and December 2013: a) His cash balance on 1 st November is b) On 5 th, 12 th, 19 th November MB was paid for each performance. c) A performance was concluded on 26 th November at the same rate as those mentioned above. The stipulations of the performance invoice stated that the client would pay the performance fee 30 days later. The client paid the fee to MB 4 weeks from the date of the performance. d) In December MB had four performances for which he received a total of after giving each customer a discount. e) In addition one grateful client gave him discount vouchers to the value of for a night at a game lodge. f) MB s manager was paid 10% commission based on performance takings each month. (He does not get commission on receipts from credit customers.) g) MB was notified by a lawyer that a client who gave him a cheque for in October had been arrested for fraud and the bank reversed the amount. h) MB s manager reminded him that his sound equipment was being depreciated at per month. i) In November and December MB paid for food to the value of and respectively. j) His monthly bond repayment is However, as he went on holiday in the last part of the month, he only paid the December amount on 7 th January. k) He normally pays his advertising agency the amount of per month on receipt of an invoice. He only received the November and December invoices in December. EQUIED 6.1 Using the format provided below, prepare the basic cash flow statement of Mango Buffin for November and December (Be sure to clearly distinguish cash inflows from outflows.) November December Opening balance eceipts Payments ( ) ( ) Closing balance (14)

7 Page 7 of Name two (2) items/accounts/transactions that would not appear in a cash flow statement. (2) 6.3 Discuss two (2) reasons why a bank/lender would choose to look at an entity s cash flow statement compared to the income statement. (4) QUESTION 7 [10] The production department at Naartjie Sign Company is your responsibility. The department manufactures two types of signs, in metal and flexible plastic, for Primedia Outdoor. The costs for 500 metal signs and 700 plastic signs are as follows. Metal Plastic Material: 500 pieces pieces Labour: hours hours The metal workshop takes up 70% of the work area and the plastic workplace the balance. The rental cost is per month. - The supervisor, whose salary is per month, is responsible for the staff in both areas. - The other overhead costs of are apportioned in line with the volume. - Naartjie requires a mark-up of 50% on cost in determining its selling price. The figures above resulted in the following projected cost budget of the company: Metal Plastic Total Cost Item Material 500@ @ Labour 1000@ @ ent x 70% x 30% Supervision x x / /2400 Other fixed x x costs 500/ /1200 Total Cost EQUIED 7.1 Calculate the cost per sign and selling price per sign. (Hint: ) (4) 7.2 Calculate the total budgeted gross profit (based on your calculations above) using the format provided below: Metal Plastic Total workings workings Sales Cost of sales Gross Profit (6) ASSIGNMENT TOTAL: 100