QUESTION 14

A depreciation of R600 000 (R3

000 000/5) that will be written off by Dalton at the end of the following

financial year after replacing the injection moulding will be part of expenses

and will be treated as a cash outflow.

a.    True

b.    False

QUESTION 20

The interest payable if the

business (Dalton) uses 20% of the revolving credit limit for 28 days, and the

interest is calculated on a daily basis, is equal … .

a.    R449.13

b.    R760.41

c.     R870.30

d.    R980.31

QUESTION 13

The ability for Dalton's to

replace its defective injection moulding can be referred to as liquidity.

a.    True

B.    False

Read

the following case study and answer questions 12 to 25.

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 Ltd could not share in this growth due to the technical problems

experienced with the current machine. To increase its production and sales, the

company is considering replacing the current injection moulding machine with a

more technically advanced model, which will cost the company R3 000 000, which

will be raised as a loan from Standard Bank at a fixed interest rate of 11.75%

per annum

In financing

working capital, the company secured a total revolving credit limit of

R170 000 from Capitec Bank at an interest rate of 12.2% per annum.

ADDITIONAL

INFORMATION:

Mac Robert,

the chief executive officer (CEO) at Dalton Ltd, appointed you (FIN3703

student) at the head office as a treasurer to replace the old injection

moulding.

The human

resources department provided you with a detailed document that, among other lists

the following treasurer performance agreement areas (KPAs):

KEY PERFORMANCE

AREA (KPA)

§ 

• Ensure the implementation of GAAP.

• Provide strategic leadership in the treasury

  office of the company.

§ 

§ 

§ 

§ 

The chief

financial officer (CEO) of the company invited you to a briefing session on the

policies of the company and presented you with the following funding and

sub-risk management policy documents.

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 amendment 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 all short-term and

long-term funding needs of the company. The following funding sources are

authorized by the board of directors:

DALTON’S RISK TREASURY POLICY

This is what

you find in the company’s treasury department:

Mr Sibusiso

Bengu, the most experienced personnel at the Roodepoort branch, who have 10

years good relationship with Standard bank manager has the responsibilities to

ensure that every time the Standard bank branch account reaches R450 000, the

amount by which the account exceeds R200 000 (that is R250 000) is transferred

to the head office account. 

REQUIRED:

After

reviewing and analysing the case study of Dalton Ltd thoroughly, answer

questions 12 to 19.

QUESTION 12

The treasurer must develop a cash flow statement to

determine how much Dalton Ltd needs each day to fund the business operations.

a.    True

b.    False

QUESTION 11

a.    The accounting net income is more

useful to the financial manager.

b.    The cash flow statement is more

useful to the accountant.

c.     The cash flow statement is

more useful to the financial manager.

d.    None of the above is correct

FOR QUESTIONS 9 TO 11, REFER TO THE FOLLOWING INFORMATION:

Van Schaik Bookstore supplies

textbooks to college and university bookstores. The books are supplied with a

provision that they must be paid for within 30 days. In 2023, Van Schaik

bookstore supplied and billed books totalling R760 000. Collections, net of

return credits, during the year totalled R690 000. The company spent R300 000

acquiring the books that it supplied.

QUESTION 9

Using the accrual accounting

value (accrual principles), the company’s net profit for the past year

equals... .

a.    R390 000

b.    R460

000

c.     R480

000

d.    R490

000

QUESTION 10

 Using cash accounting value (cash

principal principle), the company’s net cash flow for the past year is equal to

… . 

a.    R390

000

b.    R460 000

c.     R480

000

d.    R490

000

The yield to maturity associated

with the bid is equal to …

a)    8.71%.

b)    8.78%.

c)    8.86%.

d)    8.93%

QUESTION 6

Which of the following statements

correctly describes the forward contracts?

a.    They

are tailor-made instruments that are traded over the formal exchange.

b.    They

are standardised financial instruments that have a low credit risk and are easy

for the parties involved to get out of the contract once it has been

established.

c.     Because

of their nature, it can be concluded that they are liquid and have very low

credit risk.

d.    

Because

they are tailor-made, it is difficult to get out of once they have been

established.

QUESTION 5

Which of the

following statements correctly describes the disadvantage of cash

concentration?

1. Sweeping cash to different

   subsidiaries or sub-accounts can delay payments if it is not done in real

   time.

2. It enforces a bureaucratic

   management approach where subsidiaries have less autonomy.

3. It enhances ACH to clear

   cash and transfers it electronically and rapidly.

4. It may expose the business

   to liquidity risk at the sub-account level.

1.    a,

b and c

2.    a,

b and d

3.    b,

c and d

4.    a,

c and d