QUESTION 1 (25 Marks) 1.1 REQUIRED Study the information provided below and answer the following questions: 1.1.1 Calculate the return on net assets of each company. (3 marks) 1.1.2 Comment on the returns and risk associated with the different working capital policies from the figures provided below: (8 marks) INFORMATION Company A Company B Company C Conservative Moderate Aggressive R R R Statement of Comprehensive Income Sales 3 000 000 3 000 000 3 000 000 Operating profit 337 500 337 500 337 500 Statement of Financial Position Non-current assets 1 500 000 1 500 000 1 500 000 Net working capital 1 125 000 687 500 50 000 Current assets 1 875 000 1 625 000 1 175 000 Current liabilities (750 000) (937 500) (1 125 000) Analysis Company A Company B Company C Return on net assets ? ? ? Current ratio (risk) 2.50:1 1.73:1 1.04:1 1.2 REQUIRED Use the percentage-of-sales method to determine the working capital requirements of Olala Ltd for 2021 from the information provided below. (6 marks) INFORMATION The following information was extracted from the financial statements of Olala Ltd at the financial year end 31 December 2020. The sales forecast of Olala Ltd for 2021 is R6 250 000. 1.3 REQUIRED Use the information provided below to calculate the effective interest rate (expressed to two decimal places) if: 1.3.1 the interest is discounted. (4 marks) 1.3.2 there is a 15% compensating balance requirement. (4 marks) INFORMATION Umhlali Limited intends borrowing R6 250 000 for one year. The stated interest rate is 18%.