On the 15th of December 2023, Four Roses Pty Ltd is planning its working capital management for January 2024.

Beginning January 2024, the predicted financial information is as follows:

Item Value (R)
Inventory 4 550 000
Trade receivables 4 083 500
Trade payables 1 867 000
Overdraft 2 402 500

For 2024, the company expects to generate sales revenue worth R35 000 000 and sells all its products on credit. The following are the monthly sales figures for the remaining months of the year and January 2024:

Month Sales Value (R)
November 2023 (actual) 2 708 750
December 2023 (predicted) 3 000 000
January 2024 (predicted) 3 500 000

Four Roses Pty Ltd provides you with the following information as well:

• 40% profit margin policy.
• Offers 30 days credit and uses a 365-day year.
• 60% of its customers settle in the month after purchase.
• Remaining customers take an additional month of credit.
• Inventory is expected to increase by R522 500 during the month of January 2024.
• Plans to settle 70% of its trade payables in the month of January 2022 and the balance at the end of February 2024.
• All the company’s suppliers require settlement within 30 days.
• Purchases on credit in the month of January 2024 are forecasted as R2 500 000.
• Interest on overdraft worth R700 000 is due in January 2024.
• The finance manager forecast that January’s operating cash outflows to amount to R1 465 000.
• The finance manager informs you that Four Roses Pty Ltd has no cash and is depending on a bank overdraft. The overdraft is utilised to finance daily operations. As far as they are concerned, the company has no plans to raise long term funds in the month of January 2024.

You are required to:

a. Calculate:

i. Four Roses Pty Ltd’s cash operating cycle at the beginning of January 2024. Round off days to nearest day. (10)

ii. Four Roses Pty Ltd’s current ratios at the beginning and end of January 2024.

b. Appraise and recommend five ways or strategies to manage trade receivables you would provide to the Four Roses Pty Ltd’s finance manager. (10)


‘Big changes at Spar after 3 loan ‘irregularities’ exposed and reported’ (25)

Retail group Spar will see big changes at the management level following widespread media reports about an alleged loan scandal at the group. The group notified shareholders on Thursday (19 January) that it is in the process of resolving issues around the reports, but maintains that the allegations levelled against it are unfounded. News24 reported on a leaked report from law firm Harris Nupen Molebatsi (HNM), alleging that the group engaged in discriminatory practices and made dodgy loans to certain franchisees and set them up with businesses doomed to fail.

Spar said it “deeply regrets” the allegations of discrimination against certain retailers but insisted that they were unfounded. “Over the past month, Spar and the external auditors have conducted investigations into the matter. At the end of the process, the board agreed with Spar’s auditors that a reportable irregularity had occurred. Spar’s auditors are satisfied that this was an isolated matter and is no longer taking place, and adequate steps have been taken for the prevention of any loss as a result thereof,” it said.

The board said that a written loan agreement was entered into between a willing lender and borrower through a commercial bank, at normal interest rates with fixed terms of repayment.

“However… the loan did not seem to have served any real commercial or economic purpose and should not have taken place,” it said. An extensive review of all loans arranged by Spar for retailers identified two other transactions of a similar nature, with a combined value of R11 million.

Spar board said that it has met several times over the past few months to address concerns about the perceived shortcomings regarding the composition of the board, and has subsequently made significant changes, including new appointments and seeing some members go.

Mike Bosman was appointed as an independent non-executive director and the new chairman of the board with effect from Thursday, 15 December 2022. Shirley Anne Zinn and Pedro Manuel Pereira da Silva have been appointed as independent non-executive directors, effective immediately following the 2023 AGM. Meanwhile, former chairman Graham O’Connor will retire on 14 February 2023 and Phumla Mnganga, who served on the board for 17 years, will be stepping down as an independent non-executive director at the same time.

Spar CEO, Brett Botten, will be retiring as CEO and member of the Board on Tuesday, 31 January 2023. Botten’s retirement is pursuant to his request to the board for an early retirement, the group said. “Shareholders are advised that succession discussions are underway, and the appointment of a new group CEO will be announced in due course,” it said.

• BusinessTech. (2023). Big changes at Spar after 3 loan ‘irregularities’ exposed and reported, at-spar-after-3-loan-irregularities-exposed-and-reported/ (Retrieved August 01, 2023).

As a financial professional and potential manager, you need to be aware of the impact of business-ills such as corruption, bribery and fraudulent financial reporting on the environment, society and governance (known as ESG factors). How would you advise management at Spar to approach and remedy this scandal?

The company you recently joined and now work for as a finance manager has been involved in fraudulent financial reporting and underhand dealings in its service provision under its previous financial manager.

A recent investigation discovered that these two aspects have been ongoing since the company was formed in 2001 and the finance department has been at the forefront of designing such fraudulent financial reporting and other underhanded schemes.

The board has requested you to formulate internal controls and ethical guidelines and present these in a speech, at their next meeting, to ensure that the fraudulent financial reporting and underhand dealings will not occur in future or at least mitigate their occurrences in future.


You are a financial analyst tasked with evaluating investment projects for a company operating under capital rationing. Discuss the key considerations and challenges you would face while applying project appraisal techniques in this context. Additionally, provide a detailed comparison of the ‘make or buy’ approach for project evaluation, highlighting its relevance in optimizing resource allocation. Support your response with real-world examples


Critically discuss the significance of financial management in a business and its impact on organisational success and decision making.
Answers to Above Questions on Financial Management

Answer 1: The calculation of Four Roses Pty Ltd’s cash operating cycle at the beginning of January 2024 is performed as follows:


Get completed answers on the above questions on financial management from the accounting assignment help experts of Student Life Saviour.

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