FIN3703 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 7 September 2024
FIN3703 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 7 September 2024
FIN3703 Assignment 2 (QUIZ) Semester 2 2024 - DUE 7 September 2024
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Treasury Management
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FIN3703 Assignment
2 (COMPLETE
ANSWERS) Semester 2
2024 - DUE 7
September 2024 ;
100% TRUSTED
Complete, trusted
solutions and
explanations.
ADMIN
[COMPANY NAME]
,FIN3703 Assignment 2 (COMPLETE ANSWERS) Semester
2 2024 - DUE 7 September 2024 ; 100% TRUSTED
Complete, trusted solutions and explanations.
Dalton Ltd – is the third largest South African manufacturer of
high-quality JoJo tanks with its head offices situated in Midrand.
The company owns four branches: one in Naturena, the second
in Ennerdale, the third in Pachuca and the fourth in Roodepoort.
Although the market for JoJo tanks has been expanding
extremely well, Dalton could not share in this growth due to the
technical challenges experienced with the current machine. To
increase production and sales, the company is considering
embarking on an extensive marketing campaign, offering better
credit terms and replacing the current injection moulding
machine with a more technically advanced model which will
cost the company R3 000 000. In funding the replacement
project, a five-year loan will be raised from standard bank at a
floating interest rate of 11.75% per annum. The replacement
requires that the company increases its working capital by R240
000. In financing the working capital, the company will secure a
total revolving credit loan with a limit of R240 000 from Capitec
bank, at a floating interest of 12.2% per annum. DALTON Ltd
TREASURER As a Unisa final year treasury management
student, you have been appointed as a treasurer by Mac Rebert,
the chief executive officer (CEO) at Dalton Ltd head office.
KEY PERFOMANCE AREA The human resources department
provided you with detailed documents that among others, list the
following treasurer key performance agreement areas (KPAs): ▪
Advise on the recruitment of treasury department personnel. ▪
, ensure the implementation of GAAP. ▪ provide strategic
leadership in the treasury office of the company. ▪ set overall
financial strategies, goals and objectives for the company. ▪
Manage cash and liquidity. ▪ Establish and manage an excellent
banking relationship. ▪ Manage corporate treasury risk. FIRST
MEETING WITH THE CEO Mac Robert invited you to a
special briefing session to discuss the funding and sub-risk
policies below: DALTON’S FUNDING POLICY The funding
strategy shall be submitted to board of directors for approval
before the commencement of the financial year for which it is
applicable and shall be reviewed for amendments should the
need arise. The funding strategy shall outline the borrowing
requirement for the financial year in question and shall outline
the different funding sources the company may utilize to meet
its borrowing requirement. The borrowing requirement consists
of short-term and long-term funding needs of the company. The
following funding sources are authorized by the board of
directors: MONEY MARKET CAPITAL MARKET ▪
Commercial paper ▪ Bank overdraft ▪ Revolving credit ▪
Treasury bills ▪ Bank long-term loans DALTON’S RISK
TREASURY POLICY There are various risks facing Dalton Ltd
on regular basis which necessitate vigilance and precautionary
measures. Some of the risks include liquidity risk and interest
rate risk. It is the company’s policy that identified risks must be
managed within the principles of risk mitigation strategies laid
by the Board of Directors which are reflected in risk
management policy documents. The company’s risk
management policies consist of the following sub risk policies.
CASH AND LIQUIDITY RISK MANAGEMENT POLICY
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