QUESTION $3$

$(20$ Marks$)$

REQUIRED

Study the information provided below and prepare the following for July and August $2024.$

$3\mathrm{.}1$ Debtors Collection Schedule

$(4$ marks$)$REQUIRED

Use the information provided below to answer the following questions.

$4\mathrm{.}1$ Calculate the following ratios for $2023$ only. Note: Use the formulas provided in the formula sheet

only $($that appear after QUESTION $5).$ Answers to the ratios must be expressed to two decimal

places.

$4\mathrm{.}1\mathrm{.}1$ Inventory turnover

$(2$ marks$)$

$4\mathrm{.}1\mathrm{.}2$ Net profit margin

$(2$ marks$)$

$4\mathrm{.}1\mathrm{.}3$ Debt$-$equity

$(2$ marks$)$

$4\mathrm{.}1\mathrm{.}4$ Earnings per share

$(2$ marks$)$

$4\mathrm{.}1\mathrm{.}5$ Finance cost coverage

$(2$ marks$)$

$4\mathrm{.}1\mathrm{.}6$ Average collection period

$(2$ marks$)$

$4\mathrm{.}2$ Will the company be able to pay its shor$-$term debts if business conditions are

unfavourable? Motivate your answer by using an appropriate ratio.

$(4$ marks$)$

$4\mathrm{.}3$ Will the shareholders of the company be satisfied with the return on their investments?

Support your answer with the use of an appropriate ratio.

INFORMATION

The extracts of the financial statements of Fabrice Limited for $2022$ and $2023$ are provided below.

$3\mathrm{.}2$ Cash Budget

$(16$ marks$)$

INFORMATION

Glenville Limited is in the process of developing a cash budget for July and August $2024.$ The following

information is available:

Expected sales from May to August $2024$ are as follows:

Historically $70\%$ of the company's sales has been on cash and the rest on credit. Twenty percent

$(20\%)$ of the cash sales is subject to a discount of $10\%.$

Sixty percent $(60\%)$ of the credit sales is usually collected in the month after the sales, thirty five percent

$(35\%)$ is collected two months after the sale and the balance is written off as bad debts.

During August $2024$ the company expects to receive a dividend of $8$ cents per share on the $70000$

shares that it holds in Camry Limited.

The company's purchases of inventory are estimated to be $60\%$ of sales. Thirty percent $(30\%)$ is paid

in cash and a discount of $10\%$ is receivable. The balance is paid in the month after the purchase.

$($Separate entries are required for the cash purchases and payments for credit purchases.$)$

The monthly rental, payable at the end of each month, will increase by $10\%$ with effect from $01$ August

The rental payable on $31$ August is R$26400.$

The fixed salary cost for $2024$ is R$420000$ and is paid evenly every month.

Interest on loan for two months at a rate of $15\%$ per year is payable on the loan balance of R$150000$

during August $2024.$

New machinery with a cost price of R$450000$ will be purchased and paid for during July $2024.$

Other cash operating expenses are forecast at R$200000$ for June $2024$ and are expected to increase

by $5\%$ each month.

Cash in the bank on $30$ June $2024$ is expected to amount to R$20000.$