QUESTION 1 (30 AMRKS) This question requires not only critical thinking, but it also requires you to be very practical a

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Question 1 30 Amrks This Question Requires Not Only Critical Thinking But It Also Requires You To Be Very Practical A 1 (59.05 KiB) Viewed 13 times

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QUESTION 1 (30 AMRKS) This question requires not only critical thinking, but it also requires you to be very practical as much as possible. "Hint: The nature of cash flow, language used, and the position you have taken, are some of the important aspects that should aid you in answering this question successfully". You are advised, where applicable, to make use of an Amortization Table. Failure to populate the missing figures correctly would mean, whatever you may do thereafter shall be influenced by your initial figures. Please avoid copying from each other (i.e. from another group/s) as that shall prompt me to grade you with a 0%. You are encouraged to first read extensively about the topics that made up this assignment before you attempt any question thereof. Windhoek Logistics and Supply Chain CC "WLSC") is one of the prominent suppliers to various entities not only around Windhoek, but the country-over. Their client-base ranges from OMAS, NGOs and various private entities because of their marketing moto of: "You name it we deliver it'. Suppose you have been appointed by your employer/entity/company/" to engage WLSC so that they can be one of your suppliers. Your employer has so much confidence in you because you had recently attended a Professional Development Course on Logistics, Procurement and Supply Chain Management at NUST. One of the modules that featured prominently is Financial Techniques for Procurement and Supply Chain Management. This module, among others; is aimed at equipping Procurement Officers with the necessary financial management skills, thereby equipping them to make prudent financial management decisions. Your employer/entity/company/" has provided you with the following records (extracts) in respect of WLSC: WINDHOEK LOGISTICS AND SUPPLY CHAIN CC STATEMENT OF COMPREHENSIVE INCOME (EXTRACT)-31 DECEMBER 2021 2020 Notes NS N$ Sales revenue 1 600,000.00 750,000.00 Less: Cost of sales 390,000.00 - 562,500.00 Gross profit 210,000.00 187,500.00 Total operating expenses 60,000.00 EBIT 127,500.00 Finance cost: FNB Loan ? EBT ? Taxation @ 30% ? Profit for the year ? 2 . . 60,000.00- 150,000.00 ? ? ? ?
WINDHOEK LOGISTICS AND SUPPLY CHAIN CC STATEMENT OF FINANCIAL POSITION (EXTRACT) - 31 DECEMBER 2021 2020 Notes N$ N$ 800,000.00 750,000.00 209,999.08 230,000.23 ? ? 600,000.00 600,000.00 ? ? ? ? 180,000.00 ? 133,723.00 151,781.00 ? ? NON-CURRENT ASSETS: Property, Pland and Equipment CURRENT ASSETS: Total current assets TOTAL ASSETS EQUITY AND LIABILITY: Share capital Retained earnings TOTAL EQUITY LONG-TERM LIABILITEIS: Loan: FNB @ 8% over 2 years CURRENT LIABILITIES: Total current liabilities TOTAL EQUITY AND LIABILITIES 3 4 5 6 7
NOTES: 1. The company has a 100% credit policy. 2. The finance cost is in respect of the N$300 000 Loan that Windhoek Logistics and Supply Chain CC obtained from FNB on 1 January 2020. The Loan is payable into two yearly equal instalments at the end of each year, at an interest of 8% per annum. 3. For both years, the total current assets includes 18% and 20% of inventory and accounts receivable, respectively. The balance is for other receivable. 4. No common stocks were issued over the two years. Thus, the company opted for debt fiannce as pointed out in Note 1, above; being considered the cheapest way of raising fiance. 5. No dividends were declared nor paid over the two years. 6. Given the successful settlement of the initial advancement of the N$300 000 @ 8% p.a. over two years, another Loan of N$180 000 was concluded on 31 December 2021. This second loan carries exactly the same credit terms as that of the former. 7. The total current liabilities is made up of accounts payable only. REQUIRED: Assume a 365 days-calendar year. Please number your answers correctly. 1.1. What is the logic behind the concept of time value of money, and what comes to your once as soon as you read the word 'ratio? 1.2. On the basis of the following ratios, given the task that you have been entrusted with by your employer, what would your recommendations be (please show all your workings not only clearly, but in a very coherent manner): HOW LIQUID IS WLSC? k Current ratio ii. Quick ratio Bil. Inventory turnover ratio iv. Average Collection Period on Accounts Receivable 30 V. Accounts Receivable Turnover Ratio 1.3. HOW HAS WLSC FINANCED ITS ASSETS, AND WILL IT BE ABLE TO SERVICE ITS DEBT? 1. Debt ratio ii. Times interest earned ratio 1.4. HAS WLSC EARNED ADEQUATE RETURNS ON ITS INVESTMENTS? THESE RATIOS ENSURE GOING CONCERN THEREBY ENSURING RELIABILITY OF WLSC AS YOUR SUPPLIER. i. Gross profit margin H. Net profit margin MARKS
QUESTION 2 (10 MARKS) REQUIRED: 2.1. 2.2. TOTAL AMRKS FOR QUESTION 2 TOTAL MARKS FOR INDIVIDUAL ASSIGNMENT MARKS 5 Briefly discuss the distinction between capital markets and money markets. In your discussion, clearly point out which of the two is commonly used by governments in raising finance aimed at funding capital projects like roads infrastructure. Identify any two entity forms, and briefly discuss about their legal liability. 5 10 40 //END//