Exam (elaborations)

Exam (elaborations) MAC3702 - Application Of Financial Management Techniques (MAC3702) ASSIGNMENT 1 SEMESTER 2 YEAR 2022

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University Of South Africa (Unisa)

Exam (elaborations) MAC3702 - Application Of Financial Management Techniques (MAC3702)

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Uploaded on August 21, 2022
Number of pages 22
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Type Exam (elaborations)
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exam elaborations mac3702 application of financial management techniques mac3702 assignment 1 semester 2 year 2022

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8/19/22, 8:18 PM Assessment 1: Attempt review

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Dashboard / Courses / UNISA / 2022 / Semester 2 / MAC3702-22-S2 / Welcome Message / Assessment 1

Started on Friday, 19 August 2022, 8:31 AM
State Finished
Completed on Friday, 19 August 2022, 8:17 PM
Time taken 11 hours 45 mins

Question 1
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Which of the following statements are accurate?
a) Companies with aggressive working capital policies often have big cash reserves to take advantage of asset acquisition opportunities
that may arise.

b) Debtors’ time lag is an indication of how long it takes the company to convert its resource inputs into cash for companies that sell on
credit.

c) The net current asset ratio can be used to gauge the liquidity position of the company.

d) Implementation of a JIT process requires long-term commitment from few key suppliers.
Choose the CORRECT combination:

1. Options (a), (b) and (d)

2. Options (a), (c) and (d)

3. 1. Options (b) and (c)

4. Options (c) and (d)

https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=4875565&cmid=281044 1/22

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Question 2

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Which of the following statements are more accurate?
Dashboard / Courses / UNISA / 2022 / Semester 2 / MAC3702-22-S2 / Welcome Message / Assessment 1
a) The payback period measures the amount of time required to recover the initial investment by taking into consideration the time value
of money.
b) The NPV and IRR techniques consider the time value of money.

c) The NPV and NPVI techniques always rank the projects in the same order.

d) PI is a measure of a project’s profitability relative to each rand invested in the project.

Choose the CORRECT combination:

1. Options (c) and (d)

2. Options (a) and (b)

3. Options (b) and (d)

4. Options (a), (b) and (d)

https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=4875565&cmid=281044 2/22

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Question 3

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Polokwane Systems (Pty) Ltd
Dashboard / Courses / UNISA / 2022 / Semester 2 / MAC3702-22-S2 / Welcome Message / Assessment 1
Polokwane Systems (Pty) Ltd is a medium size entity that manufactures and sells electronic gate remotes to retailers for resale and
installation. Because of an increase in security risks, the company had to expand to meet the growing demand. Many new players have
recently entered the market and customers are in the position to negotiate favourable credit terms. Polokwane Systems (Pty) Ltd is now
reviewing its credit policies, with intentions to change its credit terms currently offered to its customers.

Additional information:
· The budgeted turnover for the next year is expected to be R3 240 000, if the current credit term of one month offered by the company
is extended to two months (this will be a 10% increase from current turnover levels). If the credit term is extended to three months, the
turnover will increase to R3 600 000. Credit term is determined after the invoice date and all sales are on credit.

· It is anticipated that bad debts will be 2% of the total turnover for a credit term of one month, 3% for a credit term of two months and
6% for a credit term of three months. The rest of the customers will adhere to the credit terms.
· A cash discount of 5% is offered to customers making their payments within 15 days. Roughly 20% of customers use the discount for
early payment. All other customers use normal credit terms. Discount allowed and received are classified as operating expenses and income
respectively.

· The company marks up its goods by two-thirds of cost. The company negotiates and sticks to a credit term of 60 days with all its
suppliers. You can assume there is 365 days in a year.
· The cash operating and administration costs are estimated at R130 000 per year.
· The balances of the working capital accounts for the current year are as follows:

o Bank account: R200 000 (opening credit balance)
o Trade receivables: R230 000 (closing balance)

o Trade payables: R270 000 (closing balance)

,· The company currently pays interest on the bank overdraft balance of 8,25% per year. This rate also approximates the company’s
weighted average cost of capital. The company earns an average of 3,5% per annum based on the closing bank balance, if favourable.
Calculate the average debtors’ time-lag for the current year. Round your final answer to two decimal places.

1. 28,50 days

2. 28,79 days

3. 25,91 days

4. 32,39 days

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