Purchasing and Financing 2024

If FV = PV (1+ i/100) n , How much money would he need to invest at an interest rate of
10%, at the end of the year if he requires an amount of R45 000-00 5 years later, when
Sabelo goes to university.
Question 4
The following information was obtained from the financial statements of Creative Plastics
for the years ending 31 December 2007 and 2008 respectively.
Details 2007 2008
Cash sales
Credit sales
Credit purchases
Gross profit
Net profit
R
400 000
1 400 000
450 000
450 000
108 000
R
600 000
1 800 000
550 000
480 000
120 000
Details 2007 2008
Fixed assets
Creditors
Long-term liabilities
Capital
Stock
Debtors
Current assets
400 000
260 000
200 000
440 000
350 000
350 000
700 000
400 000
500 000
-
500 000
500 000
400 000
900 000
Use the information above to calculate the current ratio, acid test ratio and the solvency
ratio for 2007 and 2008. Comment on the financial position of the business based on
each ratio and state the advice you would give the business if any.
What type of business ownership does this company have?
What industry does this business operate in?
If Collection Period = Debtors x 365 / Turnover, how long did this company take to collect
money from creditors in 2008?
Question 5
You buy 5 ovens for your bakery at the beginning of year 1 at R2 000-00 each and they
have a life expectancy of 2 years. Assuming that the business makes a healthy profit,
indicate how you would use depreciation calculated according to the straight-line
method, to finance new ovens from released capital, over a three year period.
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