3.2 Calculate the working capital cycle (WCC) days of both companies for 2021 and identify and...

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3.2 Calculate the working capital cycle (WCC) days of both companies for 2021 and identify and motivate which of the two companies has an advantage in terms of the WCC. (4) Question 3 (25 marks) You are provided with the following ratios for MTN Group LTD and Vodacom Group Ltd. Use the information provided to complete the required. Financial ratios of MTN Ltd and Vodacom Ltd 2019 2020 MTN 2021 2019 2020 2021 Vodacom PROFITABILITY RATIOS REVENUE (Billions of rands) 151.46 179.36 181.65 86.63 90.75 98.34 Gross Margin % 70.98 71.96 73.65 63.72 63.77 63.10 Operating Margin % 20.46 24.04 25.06 25.10 25.96 25.67 Net Margin % 5.92 9.49 7.57 17.11 17.57 16.87 Return on Equity % 10.63 18.23 12.86 20.81 18.80 19.39 ACTIVITY/EFFICIENCY RATIOS Debtors' Collection Period (days) 35.10 30.28 30.02 68.40 74.10 73.01 Inventory On Hand (days) 19.57 11.80 11.72 15.42 15.52 12.98 Creditors' Payment Period (days) 99.93 85.23 100.78 293.64 322.20 314.84 DEBT/GEARING RATIOS Financial Leverage 3.60 3.39 3.29 1.97 2.08 2.17 Debt/Equity 1.44 1.19 0.96 0.30 0.52 0.50 Interest Coverage (times) 2.22 2.89 3.19 8.34 5.90 6.68 LIQUIDITY RATIOS Current ratio Quick ratio 0.90 1.01 0.98 1.04 1.30 1.10 0.82 0.91 0.89 0.85 1.09 0.92 SHAREHOLDER RATIOS Dividend Per Share (Rands) 5.20 3.35 3.00 8.40 8.20 8.30 Dividend Yield % 6.30 5.9 2.33 6.76 6.59 6.17 Required 3.1 Calculate the sales growth for both companies for 2020 and 2021. (4) 3.3 As an investor with R10 000 to invest in either of the two companies, which of the two would you choose and why? Motivate using any three categories of ratios. (7) 3.4 As an investor who wants to invest in the telecommunications sector: (i) What opportunities and threats need to be considered when investing in the telecommunications sector in South Africa- any three of each. (Hint: the identified opportunities and threats need to be specific to the telecommunications industry). (6) (ii) Identify one (1) opportunity and one (1) threat you would consider to be the biggest and most important that a company operating in the sector needs to pay the closest attention to. Motivate your answer. (2) (iii) How can the opportunity identified in (ii) above be maximised and the threat be mitigated? Motivate your answer. (2) 3.2 Calculate the working capital cycle (WCC) days of both companies for 2021 and identify and motivate which of the two companies has an advantage in terms of the WCC. (4) Question 3 (25 marks) You are provided with the following ratios for MTN Group LTD and Vodacom Group Ltd. Use the information provided to complete the required. Financial ratios of MTN Ltd and Vodacom Ltd 2019 2020 MTN 2021 2019 2020 2021 Vodacom PROFITABILITY RATIOS REVENUE (Billions of rands) 151.46 179.36 181.65 86.63 90.75 98.34 Gross Margin % 70.98 71.96 73.65 63.72 63.77 63.10 Operating Margin % 20.46 24.04 25.06 25.10 25.96 25.67 Net Margin % 5.92 9.49 7.57 17.11 17.57 16.87 Return on Equity % 10.63 18.23 12.86 20.81 18.80 19.39 ACTIVITY/EFFICIENCY RATIOS Debtors' Collection Period (days) 35.10 30.28 30.02 68.40 74.10 73.01 Inventory On Hand (days) 19.57 11.80 11.72 15.42 15.52 12.98 Creditors' Payment Period (days) 99.93 85.23 100.78 293.64 322.20 314.84 DEBT/GEARING RATIOS Financial Leverage 3.60 3.39 3.29 1.97 2.08 2.17 Debt/Equity 1.44 1.19 0.96 0.30 0.52 0.50 Interest Coverage (times) 2.22 2.89 3.19 8.34 5.90 6.68 LIQUIDITY RATIOS Current ratio Quick ratio 0.90 1.01 0.98 1.04 1.30 1.10 0.82 0.91 0.89 0.85 1.09 0.92 SHAREHOLDER RATIOS Dividend Per Share (Rands) 5.20 3.35 3.00 8.40 8.20 8.30 Dividend Yield % 6.30 5.9 2.33 6.76 6.59 6.17 Required 3.1 Calculate the sales growth for both companies for 2020 and 2021. (4) 3.3 As an investor with R10 000 to invest in either of the two companies, which of the two would you choose and why? Motivate using any three categories of ratios. (7) 3.4 As an investor who wants to invest in the telecommunications sector: (i) What opportunities and threats need to be considered when investing in the telecommunications sector in South Africa- any three of each. (Hint: the identified opportunities and threats need to be specific to the telecommunications industry). (6) (ii) Identify one (1) opportunity and one (1) threat you would consider to be the biggest and most important that a company operating in the sector needs to pay the closest attention to. Motivate your answer. (2) (iii) How can the opportunity identified in (ii) above be maximised and the threat be mitigated? Motivate your answer. (2)