Downloaded from Stanmorephysics.com education Department of Education FREE STATE PROVINCE PREPARATORY EXAMINATION GRADE 12 SEPTEMBE TIME: 2 HOURS This question paper consists of 11 pages, a formula sheet and a 9-page answer book. Copyright reserved Please tum over@Bowntoeaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 1 Answer ALL the questions. 2. A special ANSWER BOOK is provided in which to answer ALL questions. 3, Show ALL workings to earn part marks. 4, You may use a non-programmable calculator. 5. You may use a dark pencil or blue/black ink to answer the questions. 6. _ Where applicable, show ALL calculations to ONE decimal point. 7. _ If you choose to do so, you may use the Financial Indicator Formula Sheet attached at the end of this question paper. The use of the formula sheet is NOT compulsory. 8. Write neatly and legibly 9. Use the information in the table below as a guide when answering the question paper. Try NOT to deviate from it. QUESTION | TOPIC MARKS _| MINUTES 1 ‘Statement of Financial Position 60 50 2 Cash Flow Statement and Financial “0 5 - Indicators 3 GAAP principles, Financial Indicators and Interpretation of Financial 35 25 Information 4 Corporate Governance. 5 10. TOTAL 150 4120 Copyright reserved Please turn over@ownlgaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, QUESTION 1: STATEMENT OF FINANCIAL POSITION (60 marks; 50 minutes) GARLAND LTD The information relates to Garland Limited, and the financial year ended on 29 February 2024. REQUIRED: 1.1 Prepare the Ordinary Share Capital note on 29 February 2024. See information B( (7) 1.2__ ‘Cloulate thie 16tBl dividends for the year. 6) f— | ‘ng the we 1.3 Caleutate jue of the closing stock using the weighted-average rmation B(iii). (5) 1.4 2 RO RE mont of Financial Position on 29 February 2024 after taking all the adjustments and additional information into account. (42) Copyright reserved Please turn over@Bowntoeaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, INFORMATION: A. Extract from the Pre-adjustment Trial Balance on 28/29 February: BALANCE SHEET ACCOUNTS SECTION Ordinary Share Capital Retained income | Mortgage loan: Umgeni Bank ht ail Fixed assets (carrying value) _——=—SS | 6 963 500 ptown Bank (9% interest p.a.) ms Trading stock Debtors’ control | Provision for bad debts i Bank overdraft (Balancing figure) Petty cash 6 000 Creditor's control 196 500 SARS: Income tax (provisional payments) 220 000 Nominal accounts section Insurance 436 200 Rent income 274 540, Interest on fixed deposit 25500 Audit fees 90 000 Stationery 24 520 | Depreciati Interest on loan (capitalised B. Adjustments not considered yet: (i) Shares and dividends: * Authorised share capital consists of 2 000 000 shares: * 1.300 000 of the shares were in issue at the beginning of the year. ‘+ 200 000 shares were issued on 1 June 2023 at a price of R5,75. ‘+ 90 000 shares were repurchased from a shareholder atan agreed price of R6,00 per share. * Dividends of R150 000 were declared on the last day of the financial year. (ii) Mortgage loan: Interest according to the statement received from Umgeni Bank amounted to R156 000 and is capitalised. The monthly repayment on the loan, including interest, was R17 000. The company will repay R200 000 on the loan during the following financial year. Copyright reserved Please turn over@Bowntoeaded from Stanmorephysics.com FiSeptember 2024 Grade 12 Prep. Exam, (ii) (iv) Inventory: The company uses the weighted-average method to value the stock. The following information was taken from the accounting records for the year ended 29 February 2024: Number Total Detalls van units R [Opening stock 300 54000 Purchases + Carriage on purchases | 4939 | 993 800 Units sold 4044 Income tax is calculated at 30% of the net profit before income tax. Net profit after tax of R567 000 was correctly calculated AFTER taking into account the following information: * A creditor with a debit balance of R3 600 must be transferred to his account in the debtors’ ledger. * Provision for bad debts must be adjusted to 4% of the outstanding trade debtors. « Rent was received up to 30 April 2024. Consider that the rent was increased by 12% on the 1* of October 2023. * Insurance includes a twelve-month contract for R31 800. This amount was paid for the year ending 30 September 2024. « The total expenses for audit fees amounted to R120 000. Only R90 000 has been paid. « Make provision for the outstanding interest on the fixed deposit. Take into account that R50 000 was invested on 1 December 2023 for 12 months. The transaction was recorded. Interest on fixed deposits is not capitalised. * Stationery used during the financial year amounted to R21 580. Copyright reserved Please turn over@Bowntoeaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, QUESTION 2: CASH FLOW STATEMENT AND FINANCIAL INDICATORS (40 marks; 35 minutes) FREE STATE SUPPLIERS LIMITED You are provided with information relating to Free State Suppliers Ltd for the financial year ended 29 February 2024. REQUIRED: 2.1 Calculate the following for the financial year ended 29 February 2024: (i) jeithe acid-test ratio (5) (i) The debt-eauity ratio (3) (iii) The % return on average shareholders’ equity (5) (iv) The nett asset value per share (3) 2.2 Refer to the Note for Fixed assets (Information B): (i) Calculate the amount of land and buildings purchased (2) (ii) Calculate the proceeds from fixed assets sold (4) (iii) Calculate the depreciation on vehicles (5) 2.3 Calculate the following amounts for the Cash Flow Statement. Your answers must indicate the correct use of brackets. (i) Income tax paid (5) (i) The amount invested during the year (2) (iii) Repayment of the loan (2) (iv) The net change in cash and cash equivalents (4) INFORMATION: A. _ Extract from Statement of Comprehensive Income for the year ended 29 February 2024: ms 476750 Net profit before income tax 7340 000 Income tax (30% of net profit) 2 Copyright reserved Please turn over@Bowntoeaded from Stanmorephysics.com Grade 12 Prep. Exam, Copyright reserved Carrying value 28/02/2023 1820000300500, _918 500 Cost 1820 000 | 421 100. 1,686 000 ‘Accumulated depreciation =| (120.600) 67 500) Movements | (i) |_ 1251000 i ia | Depreciation EE decrees On Carrying value 29/02/2024 2049700| 321500 853.800 Cost 2.049700 |__405 500 ADDITIONAL INFORMATION: * Extensions to land and buildings were made during the year. ‘* Equipment with a cost price of R? and accumulated depreciation of R66 650 on the last day of the financial year was sold at carrying value. On the same day, new equipment with a value of R125 000 was purchased The new vehicle was bought on 1 June 2023. No vehicle was sold during the financial year. Depreciation on vehicles is provided at 20% p,j. on the diminishing- balance method FiSeptember 2024 Extract from Statement of Financial Position on the last day of the financial year: po 2024 2023] 3.225 000 3.039 000) Fixed deposit 1610000 1.450 000 Inventory 1566510 1255 840 Trade and other receivables 534 330 78 562 ‘SARS: Income tax (not included in Trade and other receivables! 4125 000 (dt) Cash and cash equivalents 427 685 25000 Shareholders’ equity 4969750 3.661750 Ordinary share capital 3550 000) 2700 000 Retained income 1.419 750 961 750 Mortgage loan: Puma Bank Trade and other payables ‘SARS: Income tax (not included in Trade and other SSI) = 110 000 (cr) Bank overdraft : 4124 500 Additional information: * On 29 February 2024 1 700 000 shares were in issue. Please tum over@Bowntoeaded from Stanmorephysics.com Grade 12 Prep. Exam, QUESTION 3: INTERPRETATION OF FINANCIAL INFORMATION (35 marks; 25 minutes) 3.1 Choose an example from COLUMN B that matches the concept in COLUMN A. Write only the letter (A-E) next to the question numbers (3.1.1 to.3.1.5) in the ANSWER BOOK. Going-concern [A concept Materiality Historical cost concept Matching Prudence Even though the market value of land and buildings is R10m, it is recorded at the original purchase price of R6,2m, Money lost due to theft of stock is written off, even though there is a possibility that it may be recovered iin future: The difectors' fees Must be reflected separately from salaries and wages. Although the eost Brices of the stock items fluctuate, the stock is recorded at cost, assuming it wi be sold sometime in the future. The tenant has paid R39 000, which includes rent for one month of the following year. Only R36 000 is recorded in the Statement of Comprehensive Income. @xt) 3.2 CHEETAHS LTD AND STORMERS LTD The information relates to two companies. BACKGROUND INFORMATION: FiSeptember 2024 (5) * Both companies operate in the sports equipment industry. The financial year ends on the last day of February each year. Sophie Mona owns shares in both companies. Where financial indicators are required to support your answer, name the financial indicator, the actual figure/ratio/percentage and trends. 3.2.1 Profitability: The directors of both companies tried to cut back on their expenses. Were they successful in their efforts? Quote TWO financial indicators for each company. 3.2.2 Liquidity: Compare the liquidity of the two companies to state which company is managing its liquidity better. Quote TWO ratios/indicators. Copyright reserved (8) (7) Please tum over@Bowntoeaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, 3.2.3. Dividend payout policy: Comment on the dividend pay-out policy of Stormers Ltd. Why do you think the directors changed the pay-out policy? (2) 3.2.4 Financial Gearing: Comment on the financial gearing of Cheetahs Ltd. 3) 3.2.5 Financing Strategies: The directors of Cheetahs Ltd have taken deliberate decisions that are reflected in the Cash Flow Statements. Explain the decision taken by the directors of Cheetahs Ltd that affected the risk of the business. Quote ONE financial indicator. (4) 3.2.6 Shareholding of Sophie Mona in both companies: * Calculate the price per share paid for the shares repurchased by Stormers Ltd (3) * Explain the effect of the share repurchase on the % shareholding of Sophie Mona in Stormers Ltd. 3) Copyright reserved Please turn over@Bowntoeaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, INFORMATION: A. _ Extracts from the accounting records at the end of the year: CHEETAHS LTD STORMERS LTD 2024 2023 2024 2023 Number of shares in Jissue Funds used to repurchase shares R4 060 000 Fixed assets purchased R2 140 000 Increase (decrease) in loan 2600000 | 2300000 } 1020000 | 1300000 R3 800 000 (R700 000) B. Financial indicators and interest rates: ea 2024 2023 2024/2023 % operating expenses on sales B 5° % operating profit on sales % net profit on sales Current ratio Acid-test ratio Debtors’ average collection period Creditors’ average payment period Debt-equity ratio % Return on average capital employed % Return on average shareholders’ equity Interest rate on loans Interest rate on fixed deposits Earnings per share Dividend payout rate C. Shareholding of Sophie Mona in both companies: CHEETAHS LTD 'STORMERS LTD 2024 2023 2024 2023 ‘Shares in each compan) 1200 000 | 1.200.000 | 540 000 | 540 000 46,2% 52,2% ? 41,5% % shareholding in each compan) Copyright reserved Please turn over@Bowntoeaded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam, QUESTION 4: CORPORATE GOVERNANCE (15 marks; 10 minutes) 44 42 43 There are three types of independent auditor's reports. For each of the following wording, give the correct type of report the auditors will issue: 444 4.4.2 4.41.3 In our opinion, except for the effect of ..., the annual financial statements represent fairly, in all material respects. In our opinion, the annual financial statements present fairly, in all material respects, ... Because of the significance of the matter described ..., we have not been able to obtain sufficient audit evidence to provide a basis for an audit opinion. (x1) @) Explain what is meant by good corporate governance and explain why it is important to shareholders. (3) Consider the following scenarios which could arise in a business. * For each scenario, state whether it is illegal or unethical. * Asa shareholder, how would you react in each case? * What do you think will be the consequences for the guilty person? 43.1 4.3.2 43.3 SCENARIO 1 Ben Brink, the Chief Executive Officer (CEO) of a company that sells pharmaceutical products, learns before anyone else that the company will lose a large contract with the government. It will have a very big negative impact on the profits of the company. He decides to sell his shares before this news becomes public. ‘SCENARIO 2 Thomas Braidy, the CEO of a company, takes his whole family on vacation to Europe. He uses the company's funds to pay for the vacation and asks the internal auditor to record the expenses as marketing ‘SCENARIO 3 As it was a tough financial year, the Chief Financial Officer (CFO) of a company decided to withhold all yearend bonuses to their workers to increase the profit of the company. (3x3) (9) EE TOTAL: 150 Copyright reservedDownloaded from Stanmorephysics.com FiSeptember 2024 Grade 12 Prep. Exam, (GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET Gross profit x 100 Gross profit x 100 Sales 1 Cost of sales 1 Net profit before tax x 100 Net profit after tax x 100 Sales 1 Sales ‘Operating expenses x 100 Operating profit x 100 Sales 1 Sales 1 Total assets : Total liabilities Current assets : Current liabilities (Current assets — Inventories) : Current liabilities | Non-current liabilities : Shareholders’ equity (Trade & other receivables + Cash & cash equivalents) : Current liabilities Average trading stock x 365 Cost of sales Cost of sales 1 Average trading stock (See Note 1 below) Average debtors x 365 Average creditors x 365 Credit sales 1 Costofsales 1 (See Note 2 below) | Net income after tax x 100 Nel income after tax___ x 100 Number of issued shares 1 ‘Average shareholders’ equity 1 (Gee Note 3 below) Net income before tax + Interest on loans x 100 ‘Average shareholders’ equity + Average non-current liabilities 1 Shareholders’ equity _ x 100 Dividends forthe year x 100 Number of issued shares 1 Number of issued shares 1 Interim dividends __ x 100 Final dividends x 100 Number of issued shares 1 Number of issued shares 1 100 Dividends per share x 100 Dividends for the year x 10 Eamings per share 1 Net income after tax 1 Total fixed costs Selling price per unit — Variable costs per unit Trading stock at the end of a financial year may be used if required in a question, Credit purchases may be used instead of cost of sales (figures will be the same if stock is constant). If there is a change in the number of issued shares during a financial year, the weighted-average number of shares is used in practice NOTE: 7 Copyright reservedDownloaded from Stanmorephysics.com education Department of Education FREE STATE PROVINCE SCHOOL: LEARNER: PREPARATORY EXAMINATION GRADE 12 INITIAL MODERATOR This answer book consists of 9 pages. Copyright reserved Please turn over@oweloeded from Stanmorephysics. com Grade 12 Prep. Exam. Book QUESTION 1 4.4 ORDINARY SHARE CAPITAL 1.300 000 | Shares in issue on 01/03/2023 Shares in issue on 29/02/2024 1.2 [calculate the total dividends for the year. | ANSWER | FS/September 2024 4.850 000 1.3 [Calculate the value of the closing stock using the weighted-average method, Copyright reserved Please turn over@oweloeded from Stanmorephysics.com FSiSeptember 2024 Grade 12 Prep. Exam. Answer Book 1.4 GARLAND LIMITED STATEMENT OF FINANCIAL POSITION ON 29 FEBRUARY 2024 ASSETS _ |NON-CURI SSETS Fixed asse CURRENT ASSETS Inventory Cash and cash equivalents (6 000 TOTAL ASSETS | SHAREHOLDERS’ EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share Capital Retained income NON-CURRENT LIABILITIES Mortgage loan CURRENT LIABILITIES Trade and other payables Bank overdraft TOTAL EQUITY AND LIABILITIES TOTAL MARKS Copyright reserved Please turn over@owwloeded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam. Answer Book QUESTION 2 Copyright reserved Please turn over@oweloeded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam. Answer Book (ii) Calculate the proceeds from fixed assets sold | ANSWER | (iv) The net change in cash and cash equivalents Copyright reserved Please turn over@oweloeded from Stanmorephysics.com Fs/September 2024 Grade 12 Prep. Exam. Answer Book QUESTION 3 3.4 3.2. 1 [The directors of both compa iedto cut back on their expenses. Were they successful in their efforts? Quote TWO icators for each compat Cheetahs Ltd: Stormers Ltd: 3.2.2 [Compare the liquidity of the two companies to state which company is managing its liquidity better. Quote TWO ratios/indicators. CHEETAHS: ‘'STORMERS LTD LTD 2024 | 2023 | 2024 | 2023 | Copyright reserved Please turn over@owenloeded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam. Answer Book GENERAL COMMENT 3.2.3 [Comment on the dividend pay-out policy of Stormers Ltd. Why do you think the directors changed the pa i 3.2.4 3.2.6 Explain the effect of the share repurchase on the % shareholding of Sophie Mona in Stormers Ltd. TOTAL MARKS Copyright reserved Please turn over@oweloeded from Stanmorephysics.com Fs/September 2024 Grade 12 Prep. Exam. Answer Book QUESTION 4 44 4.2 [Explain what is meant by good corporate governance and explain why it is important to shareholders. 4.3 [Consider the following scenarios which could arise in a business. + For each scenario, state whether it is illegal or unethical. + Asa shareholder, how would you react in each scenario? * What do you think will be the consequences for the guilty person? 4.3.1 | SCENARIO 1 Consequence Copyright reserved Please turn over@ownloeded from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam. Answer Book 4.3.2 [ SCENARIO 2 Megal’ Reaction Consequence unethical 4.3.3 [ SCENARIO 3 unethical Reaction Consequence TOTAL MARKS TOTAL: 150 Copyright reservedDownloaded from Stanmorephysics.com education Department of Education FREE STATE PROVINCE MARKING PRINCIPLES: 1 Unless otherwise stated in the marking guidelines, penalties for foreign items are applied only i the candidate is not losing marks elsewhere in the question for that iter (no penalty for a misplaced item). No double penalty applied. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is ‘earning marks on the figures for that item. Unless otherwise stated, give full marks for the correct answer. Ifthe answer is incorrect, mark the workings provided. If pre-adjustment figure is shown as a final figure, allocate the part mark for the working for that figure (not the method mark for the answer). Note: if figures are stipulated in marking guidelines for ‘component parts within workings that eam no part marks, these will not carry the method mark for the final answer as well. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If no + of — sign or bracket is provided, assume that the figure is positive. ‘Where indicated, part-marks may be awarded to differentiate between different qualities of answers, from candidates, If candidates provide more than the required number of responses, inspect all responses to give benefit to the candidate. Penalties may be applied for foreign entries if candidates eam full marks ‘on a question (max -2 per question) This memorandum is not for public distribution as certain items might imply incorrect treatment The adjustments made are due to nuances in certain questions. ‘Where penalties are applied, the marks for that section of the question cannot be a final negative. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark. ‘Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation & one part correct’. Note’ check operation must be +, -, x, + as per candidate's calculation (if valid) or per marking guidelines. In calculations, do not award marks for workings if numerator & denominator are swapped ~ this also applies to ratios. If only one line is presented, assume itis the numerator. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part, Indicate with a Be aware of candidates who provide alternatives beyond the marking guideline. Note that one ‘comment could contain different aspects Codes: f = foreign item; p = placementipresentation, These marking guidelines consist of 9 pages. Copyright reserved Please turn over@ownkoeded from Stanmorep! ysics.com FS/September 2024 ing Gui Grade 12 Prep. Exam, Marking Guidelines: QUESTION 1 4.4 ORDINARY SHARE CAPITAL 1.300 000 | Shares in issue on 01/03/2023 4.850 000 v v 200 000 | Shares issued @ R5,75 1.150 000 Shares repurchased @JR4,00 ¥ 1410 000 | Shares in issue_on 29/02/2024 5.640 000. “operation, one part correct 1.2 Calculate the total dividends for the year. | ANSWER | Retained income beginning 255 000 NP after tax 567 000 Shares repurchased (180 000) 282 000m" Dividends 2 Retained income end 360.000 360 000¥ + 180 000v Hl — 567 G0Ov ~ 255 000v (540.000 — 360 000) see 1.1 repurchase 1.3 Calculate the value of the closing stock using the weighted-average method. Closing stock: 300 + 4 939-4 044= 1195 v 11047 800 two marks 54 000 v + 993800¥ 5239 ¥ (00 +4930) 1195 = 200 three marks x 1195 239 000M Copyright reserved Please tum overBeownkoeded from Stanmorep! ysics. com FS/September 2024 Grade 12 Prep. Exam. Marking Guidelines: 1.4 STATEMENT OF FINANCIAL POSITION OF GARLAND LTD ON 29 FEBRUARY 2024 ASSETS “2 _NON-CURRENT ASSETS 7.253 500 290 000 a CURRENT ASSETS 467 975 se01.3 "a Inventory (239 000M + 2 940vv) 241 940 Trade and other receivables Fixed assets Fixed deposit (340 000v— 50 0007) transfer PBD insurance —_ Interest “Zz (152 400v+3 600v— 6 240 v + 18 550Vv+ 1 725V¥) 7 800 + 1 560 170 035 Cash and cash equivalents (6 000 + 50 000) “a TOTAL ASSETS (46) |_7721475 SHAREHOLDERS’ EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY | ShareCapita Retained income NON-CURRENT LIABILITIES Mortgage loan (800 000v+ 156 000v ~ 204 000v ~ 200 000v) (5) CURRENT LIABILITIES 1.169.475 Trade and other liabilities transfer rent audit |_ (196 500 v+ 3 600v + 41 440vv + 30 000vY) SARS: Income tax (243 000 ~ 220 000) Short term loan Shareholders’ dividends #7 150°000 a Bank overdraft 524 935 TOTAL EQUITY AND LIABILITIES TOTAL MARKS Copyright reserved Please tum overled from Stanmorephysics.com FS/September 2024 Grade 12 Prep. Exam. Marking Guidelines: QUESTION 2 (i) Calculate: Acid-test ratio [ ANSWER | 534 330v + 125 000v' #427 685”: 324 000v 1087075 < 324000 (ii) Calculate: Debt-equity ratio ANSWER 2194750¥ : 4969750¥ (iii) The % return on average shareholders" equity a 11340 000 x 70% 938 000 vv x 100 Av (4969 750 + 3 661 750) ones, v (bon gues 4315700 ome (iv) Net asset value per share [ answer | 4.969 750 292.3 cents 1700000v * gee 2.2[ qy Calculate the land and buildings: " purchased Copyright reserved Please turn over,vanrkoeided from Stanmorephysic ics.com FS/September 2024 Grade 12 Prep. Exam. (ii) Calculate the proceeds from fixed assets | answer | sold Cost: 421 100 + 125 000 — 405 500 = 140 600 vM* Carrying value: 140 600 - 66 650” 73 950H" (ii!) Calculate the depreciation on vehicles | ANSWER | 918 500¥ x (20% x 12/12) ¥ 183 700 | 204 700M 140000 ¥ x (20% x 9/12) ¥ 21.000 OR 918500 x (20% x 3/12) 45 925 4.058 500_x_(20% x 9/12) 158775, {i)» Calculatesyincome tax paid [ answer | 410.000” + 402 O00v v + 125 000v = 110 000 - 402.000 - 125 000 (410 000)(402 000)(125 000) 23 a (637 000) [ (ii) The amount invested during the year __—| 1 450 000 — 1 610 000 (160) 00) (iii) _ Repayment of the loan [ ANSWER | Ve 2.450 000 - 2 194 750 (255 250) (iv) The net change in cash and cash equivalents Net change Cash beginning (25 000 - 124 500) v Cash end Cay TOTAL MARKS Copyright reserved Please turn over,@ownkoeded from Stanmorep! yisics.com FS/September 2024 ing Gui Grade 12 Prep. Exam, Marking Guidelines: QUESTION 3 rectors of both compai ied to cut back on thei expenses. Were they successful in their efforts? Quote TWO financial indicators for each compan} Financial indicator“ ¥ figures Stormers Lid vv explanation Stormers Lid. ¥ Any two indecatore figures Cheetans Lid Y explanation Cheetans Ltd CHEETAHS LTD | STORMERS LTD INDICATOR 2024 | 2023 | 2024 | 2023 % Operating expenses on sales % Operating profit on sales % Net profit on sales 18,7% | 14,9% Cheetahs Ltd: The directors were unsuéeéssful becatise % operating expenses on sales increased/% operating profit on sales decreased/% net profit on sales decreased. Stormers Ltd: The directors were successful because % operating expenses on sales dropped/% operating profit on sales increased/% net profit ‘on sales increased. 3.2.2 [Compare the liquidity of the two companies to state which company is managing its liquidity better. Quote TWO ratios/indicators. Financial indicator 7 7 figures Cheetahs Ltd YY any ONE explanation | 7 ‘Any two indicators figures Stormers Lid 7 7 CHEETAHS: ‘'STORMERS DICATOR LTD LTD 2024 | 2023 | 2024 | 2023 Current ratio 22:1 | 24:1 | 45:1 | 50:4 Acid-test ratio 44:1 | 12:1 [19:1 | 18:1 Debtors’ collection period | 29 days | 32 days | 41 days | 38 days Creditors' payment period | 61 days | 55 days | 28 days | 32 days Copyright reserved Please tum over@ownkoeded from Stanmoreph FS/September 2024 Grade 12 Prep. Exam. 3.2.3 3.2.4 3.2.5 3.2.6 GENERAL COMMENT The liquidity of Cheetah Ltd is better because they do not have too much stock tied up in cashitheir debtors pay within 30 days/creditors are paid after 60 days, not before debtors pay their debt. ‘Comment on the dividend pay-out policy of Stormers Ltd. Why do you think the Figure and rend “Reason ¥ The dividend payout rate changed from 100% to 65%/by 35% points/53,9%. The company is retaining some of their profit for further expansion Comment on the gearing of Cheetahs Ltd. Financial indicator“ with figures) and rend ~ comment + The ROTCE changed from 12,5% to 9,7%/by 2,8% points/by 28,9% Itis less than the interest rates on loans (14%), the company has a negative gearing Explain the decision taken by the directors of Cheetahs Ltd that affected the risk of the business. Quote ONE financial indicator. Decision with igure 7 Financial nsicator “figures andlwend 7 comment They increased the loan with R3 800 000. The debt/equity ratio increased from 0,3 : 1 to 1,2: 1. They now have a high risk. Calculate the price per share paid for the shares repurchased by Stormers Ltd. 4060000 _ R14,50H 280 000V Explain the effect of the share repurchase on the % shareholding of Sophie Mona in Stormers Ltd. 540 000 1.020 000 Sophie is now the majority shareholder. © (ospenanacntsamer'sansuer) |[—3_] TOTAL MARKS x 100 =52,9%” Copyright reserved Please turn over,@ownkoeded from Stanmoreph) sics.com FS/September 2024 ui Grade 12 Prep. Exam, QUESTION 4 44 42 43 434 Qualified Unqualified Disclaimer of opinion ¥ Explanation VY Pagmare tor uncesrincompetlparal answers Managing the business on sound business and ethical principles. Looking) after the interests of all role players/stakeholders by being fair. Ensure the company has proper rules, policies and practices to create long-term shareholder value. Importance to shareholders ~ Accent shor ncompete statements + Impact on the image of the business + Improvement in share price * Potential investors will be attracted * Confidence in management and control Consider the following scenarios which could arise in a business. In your opinion: * For each scenario, state whether it is illegal or unethical. * As a shareholder, how would you react in each scenario? * What do you think will be the consequences for the guilty person? Tepainetieal 7 Rescion 7 Consequenss v (Mark reselon an canssquenos. ‘covariay), SCENARIO 1 Consequence Tegal Timust be made public __| He could be imprisoned, and he should face fined or could be charges in court! prohibited from operating Alert the board of directors | as a director. who should hold the CEO. accountable for his actions/ Recommend the demotion/dismissal of the CEO in the meeting as a motion of no confidence. Copyright reserved Please tum over@ownkoeded from Stanmorep! ysics.com FS/September 2024 Grade 12 Prep. Exam. Marking Guidelines: 4.3.2 [Tesatunctheal 7 Roaclon 7 Consequence (ark reaction and consequoncs ‘separately SCENARIO 2 Megal/ unethical Tegal! Tfthe internal auditor also | If found guilty, they could Unethical | agreed to do it, they both | be imprisoned or fined/ must be charged/ Disciplinary action! Advise the internal CEO must pay back the auditor not to get money. involved in illegal issues/ | The remuneration Recommend committee must also be investigation on the kept liable, action and the CEO be charged. Question the roll of the remuneration committee? Reaction Consequence 4.3.3. [Wenatunetneal 7 Reacton 7 Consequence (ark reaction and consequence ‘separately SCENARIO 3 egal’ unethical Unethical’ | Shareholders might have | The CFO might lose his legal sympathy with the job/ workers but may also be | The workersitrade glad that the profit of the | unions might revert to company is better. industrial actions/ If stipulated per contract, | A strike may affect the itcan be regarded as | company's profits illegal negatively, Not according to the King | Withholding bonusses Code principle referring | according to contracts to well-being of the could end-up in CCMA workers Consequence TOTAL MARKS TOTAL: 150 Copyright reserved Please tum over