DUE DATE : 3pm Tuesday 16 March MATERIAL REQUIRED : ANSWER SHEET Refer to page 7

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Page 1 of 7 ASSIGNMENT 1 st SEMESTER : FINANCIAL MANAGEMENT (FM) STUDY UNITS COVERED : MODULES 1-10 DUE DATE : 3pm Tuesday 16 March 2010 TOTAL MARKS : 100 MATERIAL REQUIRED : ANSWER SHEET Refer to

1 Page 1 of 7 ASSIGNMENT 1 st SEMESTER : FINANCIAL MANAGEMENT (FM) STUDY UNITS COVERED : MODULES 1-10 DUE DATE : 3pm Tuesday 16 March 2010 TOTAL MARKS : 100 MATERIAL REQUIRED : ANSWER SHEET Refer to page 7 INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS The complete Instructions to Students for Completing and Submitting Assignments must be collected from any IMM GSM office, the relevant Student Support 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 (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) Retain 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 3:00pm on the 16 March Late assignments will be accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00pm on the 16 March 2010 and up to 5:00pm 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. Results will be available on the IMM GSM website: on Friday, 7 May 2010.

2 Page 2 of 7 SPECIFIC INSTRUCTIONS Answer ALL questions Show ALL calculations SECTION A 35 MARKS ANSWER ALL QUESTIONS QUESTION 1 [10] For each question below select the most appropriate answer from the choice given. Mark your answer with an X in the correct block on the answer sheet on page 9. Each question is worth one mark. NB: Detach the answer sheet from the assignment and attach to your submission. 1.1 An accounting statement based on the organisation s records of physical cash receipts and payments which take place in the course of business activities is known as a: (a) Income Statement. (b) Balance Sheet. (c) Cash Flow Statement. (d) Statement of Change in Equity. 1.2 When the sales revenue for an accounting period is set off against the expenses incurred in bringing about these sales, a business is applying the: (a) matching principle. (b) ethical principle. (c) going concern principle. (d) consistency principle. 1.3 The calculation of reducing balance method of depreciation: (a) will give the same total net profit as when the declining method is used. (b) should bear an equal amount of depreciation, is widely used and simple to calculate. (c) is based on the principle that each accounting period of the asset's life is assumed to be of equal value. (d) is allowed by the receiver of revenue for tax purposes. 1.4 An abnormal large movement of the time series that affects a single observation when forecasting sales is known as a: (a) random variance. (b) catastrophic variance. (c) actual variance. (d) adverse variance.

3 Page 3 of Management is usually confronted by the degree to which they should automate processes. Identify the correct statement. (a) The higher the degree of automation, the higher the fixed costs would be and the higher the leverage of the firm. (b) The higher the degree of automation, the lower the fixed costs would be and the lower the leverage of the firm. (c) The lower the degree of automation, the higher the fixed costs would be and the higher the leverage of the firm. (d) The lower the degree of automation, the lower the fixed costs would be and the higher the leverage of the firm. 1.6 Which one of the following is the correct investment analysis statement? (a) If the IRR is less than the cost of a loan to fund the project, it means that the difference would increase the wealth of the investors. (b) Mathematically, the NPV and IRR methods will lead to the same accept/reject decisions for mutually exclusive projects. (c) The NPV-method is the only method that will correctly identify which project should be chosen from a range of alternatives if they are mutually exclusive. (d) If the firm accepts a project with a positive NPV, shareholders wealth is destroyed. 1.7 When considering short-term decisions, you should also consider the potential loss of income/revenue resulting from the decision. Such cost are known as: (a) differential costs. (b) relevant costs. (c) opportunity costs. (d) sunk costs. 1.8 Correlation is the degree of linear relationship between two variables, as established through correlation analysis and expressed by the (a) correlation coefficient. (b) coefficient of determination. (c) smoothing constant. (d) explanatory variable. 1.9 The calculation of profit is based on the (a) going concern principle. (b) ethical principle. (c) matching principle. (d) consistency principle Which one of the following is the correct forecasting technique statement? (a) It is appropriate to do a time series analysis when sales data are available over several past periods and the business has been established for a long time. (b) With exponential smoothing, data from the past is used and it is analysed for movement.

4 Page 4 of 7 (c) (d) If there is a relationship between sales and some other variable a moving average technique can be applied to construct an equation to describe the relationship. In a scatter diagram the explanatory variable (population) is plotted on the Y-axis and the dependent variable (turnover) is plotted on the X- axis. QUESTION 2 [25] 2.1 Describe the concept prudence as it relates to the valuation of stock. (3) 2.2 Define the concept asset and provide examples. (7) 2.3 Explain how each of the stakeholders listed below are potentially benefited if a firm has sufficient cash and operates at a profit: a) Customers b) Staff c) The wider community (6) 2.4 Describe how marketing people can use the Du Pont model of financial ratio analysis to find ways of improving the firm s performance. (4) 2.5 The following questions relate to capital gearing. (a) Define the concept capital gearing. (3) (b) Explain what is meant by the term highly geared. (2) SECTION B 65 MARKS ANSWER ALL QUESTIONS QUESTION 3 [30] You are required to calculate the closing stock using FIFO, and the gross profit, of B2B Enterprises at the end of April based on the information provided below. Assume that there was no opening stock. Show all your calculations determining the closing stock value and draft the Profit and Loss section of the Income Statement to determine the gross profit. Purchases Sales Month Units Cost Units Price January 500 R R 4.00 February 200 R R 4.00 March 400 R R 5.00 April 300 R R 6.00

5 Page 5 of 7 QUESTION 4 [15] You are required to calculate the break-even point, both in units and in sales revenue, for Beki s Spices. The income statement is provided below and Beki also provided the following information: a) The sales price per unit is R100. b) The cost of sales contains both a fixed and a variable component. The fixed component is 25% of the total cost of sales. You have to do the following: 1. Calculate the amount of fixed cost and variable costs of goods sold (2) 2. Indicate which of the other costs are of a fixed nature and which are variable. (6) 3. Determine the total fixed costs for the period. (1) 4. Determine the total variable costs for the period. (1) 5. Calculate the variable cost per unit. (1) 6. Give the formula to calculate breakeven point in units. (1) 7. Give the values to use in the formula. (1) 8. Calculate the breakeven in units. (1) 9. Calculate the breakeven in sales revenue. (1) Beki's Spices Income Statement for the period October 2009 Sales Cost of sales Gross profit Administrative expenses Sales salaries Sales commissions Delivery vehicle rental 5000 Delivery vehicle fuel 3000 Rent for premises 8000 Net profit QUESTION 5 [20] A company is studying the feasibility of acquiring a new machine. This machine will cost R350, 000 and have a useful life of three years after which it will have no salvage value. It is estimated that the machine will generate operating revenues of R240, 000 and incur R75, 000 in annual operating expenses over the useful life of three years. The project requires an initial investment of R15, 000 in working capital which will be recovered at the end of the three years. The firm s cost of capital is 16%. You are required to use the NPV method to determine if the company should acquire the machine. You may ignore depreciation and tax. Answer all the questions.

6 Page 6 of 7 a) What is the initial investment? (1) b) What is the initial Net Working Capital? (1) c) What is the annual operating cash flow? (1) d) What discount rate will you use? (1) e) What is the discount factor for years 1 to 3 of operation? Give the factor to four decimal places. (3) f) What is the salvage value at the end of the third year? (1) g) What is the present value of the cash flows in Year 0? (1) h) What is the present value of the cash flows in Year 1? (2) i) What is the present value of the cash flows in Year 2? (2) j) What is the present value of the cash flows in Year 3? (2) k) What is the net present value of the project? (3) l) Should the company acquire the machine? (2) ASSIGNMENT TOTAL: 100

7 Page 7 of 7 ANSWER SHEET Detach this answer sheet and insert it in the back of your answer book Give your answer by marking an X in the box you have chosen. Give only one answer for each question. ASSIGNMENT : FINANCIAL MANAGEMENT (FM) DATE : 16 MARCH 2010 QUESTION : ONE STUDENT NUMBER: Question no Answer 1.1 a b c d 1.2 a b c d 1.3 a b c d 1.4 a b c d 1.5 a b c d 1.6 a b c d 1.7 a b c d 1.8 a b c d 1.9 a b c d 1.10 a b c d

FM101 CHAPTERS COVERED : CHAPTERS 1, 5, 7 AND 8. DUE DATE : 3:00 p.m. 21 AUGUST 2012

FM101 CHAPTERS COVERED : CHAPTERS 1, 5, 7 AND 8. DUE DATE : 3:00 p.m. 21 AUGUST 2012 Page 1 of 11 ASSIGNMENT 2 ND SEMESTER : FINANCIAL MANAGEMENT 1 () CHAPTERS COVERED : CHAPTERS 1, 5, 7 AND 8 DUE DATE : 3:00 p.m. 21 AUGUST 2012 TOTAL MARKS : 100 INSTRUCTIONS TO CANDIDATES FOR COMPLETING