Assignment 1 (3)

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University of South Africa *

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2602

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Management

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Nov 24, 2024

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MAC2602/Assignment01/2/2022 ASSIGNMENT 01 - SEMESTER 2-2022 PRINCIPLES OF STRATEGY, RISK AND FINANCIAL MANAGEMENT TECHNIQUES MAC2602 Semester 2 Department of Management Accounting IMPORTANT INFORMATION Please register on myUnisa, activate your myLife e-mail address and make sure that you have regular access to the myUnisa module website, MAC2602-22-S2 (second semester) as well as your group website. This tutorial letter contains important information about your module. ~—— __— o Define tomorrow. U N l SA r‘ — university of south africa

MAC2602/Assignment01/2/2022 IMPORTANT NOTICE The order of the questions in Moodle may differ to the order of the questions in this document. Example: Question 1 in this document may be Question 20 in Moodle, the platform you are going to submit your assignment on. Kind regards MAC2602 lecturers Lecturers’ contact details: Refer to myUnisa. E-mail: MAC2602-22-S2@unisa.ac.za Please note: Only e-mails sent from your myL.ife account will be responded to.

MAC2602/001/2/2022 MULTIPLE CHOICE QUESTIONS FOR ASSIGNMENT: COMPULSORY ASSIGNMENT 01/2022 FOR THE SECOND SEMESTER MULTIPLE CHOICE QUESTIONS (60 marks) | Set your calculator on four decimal places for this assignment | ALL QUESTIONS ARE COMPULSORY FOR ASSIGNMENT 01/2022 FOR THE SECOND SEMESTER 1. All Glow (Pty) Ltd are financed as follows: 20 million ordinary shares of R2 each R40 000 000 5 000 debentures of R1 000 each R 5000 000 Retained income R15 000 000 Long-term loans R20 500 000 Calculate the debt: equity ratio (based on book values). [Round your final answer to two decimal places.] (a) 68,32:31,68 (b) 74,53:25,47 (c) 31,68:68,32 (d) 25,47:74,53 3) 2. Green Power (Pty) Ltd supplied the following information: The total amount of credit purchases relating to inventory for the year were R440 600. The balance for trade payables was R64 500. Inventory days were 120 and receivable days were 55. Use 365 days per year. They want to know the length of time between the outflow and inflow of cash. Calculate the number of days of the total cash conversion cycle. (a) 67 days (b) 122 days (c) 108 days (d) 175 days (3) 3. Which ONE of the following ratios would be most appropriate to compare the profitability of two companies that operate in the same industry? (a) Interest Cover (b) Earnings per share (EPS) (c) Price/ Earnings (P/E) (d) Asset turnover ratio (3)

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MAC2602/Assignment01/2/2022 4. Which ONE of the following is NOT an advantage of short-term financing? (a) Short-term financing can generally be obtained much faster than long-term financing. (b) It may not be necessary to offer collateral for short-term financing. (c) The interest expense may fluctuate more on the short-term. (d) The term is for a short period, and it can be obtained for the organisation’s periodic needs without committing for long periods. 3) 5. Which combination of statements refer to the transformed and evolved functions of financial management? (1) Direct involvement in the development of strategy. (2) Direct involvement in the implementation of strategy. (3) Managing business performance. (4) Managing business risk. (5) Specific focus on financing and investment decisions. (a) Statements (2), (3) and (4) (b) Statements (1), (2) and (5) (c) Statements (1), (2), (3) and (4) (d) Statements (2), (3), (4) and (5) 3) 6. The following information regarding Ethiopi company is available: The risk-free rate of return is 3%, the average market return for all shares is 7%, and the share’s beta factor is 0.6. What is the cost of equity (Ke) as percentage? [Set your calculator at four decimals and round your final answer to two decimals.] (a) 7,42% (b) 2,52% (c) 54,00% (d) 5,40% (3) 7. Growth rate refers to the increase or decrease from one period to another. Calculate the growth rate for revenue of R980 million (previous period: R780 million) and growth rate for operating cost of R23 million (previous period: R55 million). (a) Revenue 25,64% decline; Operating cost 58,18% growth (b) Revenue 25,64% growth; Operating cost 58,18% decline (c) Revenue 20,41% growth; Operating cost 139,13% decline (d) Revenue 20,41% decline; Operating cost 139,13% growth 3)

MAC2602/001/2/2022 8. The can be used to estimate the cost of equity, on the assumption that the market value of shares is directly related to the expected future dividends on the shares. 10. 11. (a) (b) () (d) Beta factor Dividend growth rate Dividend growth model Capital asset pricing model (3) Which TWO of the following are examples of connected stakeholders? (1) Customers (2) Suppliers (3) Managers (4) Executive directors (a) Statements (3) and (4) (b) Statements (1) and (2) (c) Statements (3) and (2) (d) Statements (1) and (3) (3) The CEO of Techno Ltd stated at a recent company meeting that the company has a responsibility to consider other stakeholders and ensure that the company minimises any negative impacts to the company. Which ONE of the following best describes the external environmental factor that influence the development of strategy that was referred to by the CEO? (@) (b) (c) (d) Economic environment Political environment Technological environment Social environment 3) When considering Porters five forces model, which ONE of the following would be evidence of high bargaining power of suppliers? (@) (b) (c) (d) The threat of a lot of alternatives or substitute products. The existence of many suppliers of the same product. The supplier's product is not differentiated. The buyers/customers are not important to the supplier — they are relatively small compared to the supplier. (3)

MAC2602/Assignment01/2/2022 12. Which ONE of the following is NOT a strategic aim of corporate governance? 13. 14. 15. 16. (a) To reduce costs within the organisation. (b) To improve investor confidence in the organisation. (c) To increase the organisation’s transparency to stakeholders. (d) To ensure that the organisation abides with relevant laws and acts ethically. 3) Home Products (Pty) Ltd’s mission statement is “to offer good service to all the customers”. The mission statement has recently been created by senior management but has not been communicated to the rest of the staff. Which ONE of the following benefits is Home Products most likely to see from its new mission statement in the short term? (a) Improved image to customers (b) Improved decision-making strategies (c) Improved awareness amongst stakeholders of Home Products (d) Rapid corporate culture change in Home Products staff to focus on quality 3) John invested R18 000 in an account that pays 6% simple interest per year. What is the amount of the total interest that John will have received at the end of four years? (a) R43 200 (b) R 1080 (c) R22 320 (d) R 4320 3) Which of ONE of the following risk related factors is NOT a factor that affect the cost of equity of an organisation? (a) Specific risk (b) Market risk (c) Business risk (d) Premium for cost of debt 3) Sibongile would like to invest R80 000 at the end of each year at an annual compound interest rate of 15%. Determine the value of the investment after five years by using the mathematical formula. [Set your calculator at four decimals and round your final answer to the nearest rand.] Take note: There will be rounding differences of +/- R25 if you use your financial calculator instead of the mathematical formula as was specifically required. (@) R367 445 (b) R539416 (c) R 53942 (d) R 80912 3)

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MAC2602/001/2/2022 17. Jabulani needs R100 000 to cover his child’s college expenses in eight years’ time when his son finish school. If the account pays 12% compound interest per annum, what is the amount that Jabulani needs to invest now? [Set your calculator at four decimal places and round your final answer to the nearest rand.] (a) R56 092 (b) R32690 (c) R86 956 (d) R37 594 (3) 18. Maureen receives R4 000 annually indefinitely after investing money, at 7% compound interest. What is the present value (PV) of the amount that she invested? (@) R 5714 (b) R 5142 (c) R 57143 (d) R571429 (3) 19. Which ONE of the following definitions best describes sustainability for businesses? a) All the products, processes and manufacturing activities meet customer needs, while at the same time treating the environment in such a manner that it does not decrease the ability of future generations to meet their own needs. b) The potential for long-term maintenance of wellbeing which has environmental and social dimensions. c) A setof processes, customs, policies, laws and institutions affecting the way the business is managed. d) The growth of an investment in a business where the investment can be sold after a few years at a profit. (3) 20. Which of the following statements are TRUE regarding secondary market transactions in the capital markets? (1) A very few transactions in the capital market are secondary market transactions and they do not generate cash flow for the organisation. (2) The securities of an organisation are made more attractive to other investors in a secondary market, thereby increasing the price of the securities. (3) A secondary market transaction is created when a holder of an organisation’s securities, sell the debt securities to another investor. (4) The management of an organisation should be aware of the share price as their compensation is often linked to the share price of the organisation. (5) The level of the organisation’s share price in secondary market transactions will determine how much funds can be raised by future issues of shares. (a) Statements (1), (2) and (4) (b) Statements (2), (3), (4) and (5) (c) Statements (1), (2), (3) and (4) (d) Statements (1), (2), (3), (4) and (5) (3) © UNISA 2022 All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means without prior written permission of UNISA. 7

Assignment 1 (3)

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