$1$

QUESTION$1\_($Risk and Return$).$

Marks$)$

a$.$ The income statement of Softy Ltd for the past year is as follows:

Sales $(15000$ units @ R$40)$

R$600000$

Variable Cost$(15000$@ R$17)$

$R{255000}_{?}$

Contribution

R$345000$

Fixed Cost

R$145000$

Earnings before interest and Tax

R$200000$

Interest Expense

R$70000$

Earnings before Tax

R$130000$

Tax

R$52000$

Earnings after tax

$R_{78000}$

i$.$ What is the break$-$even point in units and value $[5]$

ii$.$ Calculate the degree of operating leverage $[5]$

iii. Calculate the degree of financial leverage $[5]$

iv$.$ Calculate the degree of combined leverage $[5]$

$1$

QUESTION $1\_($Risk and Return$).$

Marks$)$

a$.$ The income statement of Softy Ltd for the past year is as follows:

Sales $(15000$ units @ R$40)$

R$600000$

Variable Cost$(15000$@ R$17)$

$R255000$

Contribution

R$345000$

Fixed Cost

R$145000$

Earnings before interest and Tax

R$200000$

Interest Expense

R$70000$

Earnings before Tax

R$130000$

Tax

R$52000$

Earnings after tax

$R_{78000}$

i$.$ What is the break$-$even point in units and value $[5]$

ii$.$ Calculate the degree of operating leverage $[5]$

iii. Calculate the degree of financial leverage $[5]$

iv$.$ Calculate the degree of combined leverage $[5]$

$1$

QUESTION $1\_($Risk and Return$).$

Marks$)$

a$.$ The income statement of Softy Ltd for the past year is as follows:

Sales $(15000$ units @ R$40)$

R$600000$

Variable Cost$(15000$@ R$17)$

$R255000$

Contribution

R$345000$

Fixed Cost

R$145000$

Earnings before interest and Tax

R$200000$

Interest Expense

R$70000$

Earnings before Tax

R$130000$

Tax

R$52000$

Earnings after tax

$R_{78000}$

i$.$ What is the break$-$even point in units and value $[5]$

ii$.$ Calculate the degree of operating leverage $[5]$

iii. Calculate the degree of financial leverage $[5]$

iv$.$ Calculate the degree of combined leverage $[5]$

all Vodacom

$10$:$32$

@ $76\%$

$$

QUESTION $1\_($Risk and Return$).$

Marks$)$

a$.$ The income statement of Softy Ltd for the past year is as follows: R$200000$Interest ExpenseR$70000$Earnings before TaxR$130000$Tax$\backslash (\backslash$underline$\{$R $52000\}\backslash )$

Earnings after tax

$R78{000}_{?}$

i$.$ What is the break$-$even point in units and value $[5]$

ii$.$ Calculate the degree of operating leverage $[5]$

iii. Calculate the degree of financial leverage $[5]$

iv$.$ Calculate the degree of combined leverage $[5]$

QUESTION $2($Risk and Return$)$

$(30$ Marks$)$

Following extensive analysis and forecasting, you have

QUESTION$1\_($Risk and Return$).$

Marks$)$

a$.$ The income statement of Softy Ltd for the past year is as follows:

Sales $(15000$ units @ R$40)$

R$600000$

Variable Cost$(15000$@R$17)$

R$255000$

Contribution

R$345000$

Fixed Cost

R$145000$

Earnings before interest and Tax R$200000$

Interest Expense

R$70000$

Earnings before Tax

R$130000$

Tax

R$52000$

Earnings after tax

$R_{78000}$

i$.$ What is the break$-$even point in units and value $[5]$

ii$.$ Calculate the degree of operating leverage $[5]$

iii. Calculate the degree of financial leverage $[5]$

iv$.$ Calculate the degree of combined leverage $[5]$