Question 1:

Explain the goal of financial management (10). Refer to the UPS Case Study provided at the end of the assignment to illustrate your answer (10).

Discuss the purpose of liquidity, and how it can be attained, as a short-term financial goal for a firm. (7)

A shareholder can also be classified as a “stakeholder” of a business. Is this statement true or false? (1). Motivate your answer (2)

Question 2:

Refer to the abstract of an Income Statement for a logistics company provided here and then answer the following questions.

 Year 2022 2021 Income Statement [Abstract] R million R million Revenue 737,160 694,980 Operating Expenses: Compensation and benefits 344,610 342,150 Repairs and maintenance 19,035 18,270 Depreciation and amortization 22,890 21,915 Purchased transportation 134,775 130,335 Fuel 43,755 25,830 Other occupancy 13,665 13,020 Other expenses 56,640 53,115 Total Operating Expenses 635,370 604,635 Operating Profit 101,790 90,345 Other Income and (Expense): Investment income and other 9,720 59,415 Interest expense -5,175 -5,160 Total Other Income and (Expense) 4,545 54,255 Income Before Income Taxes 106,335 144,600 Income Tax Expense 23,670 32,580 Net Income 82,665 112,020

Write down the formula for the Operating Profit margin (2), calculate the operating profit margin for both years showing your answer to two decimal places (4), and then comment on the result of your calculations for this firm(2).

Write down the formula for the Net Profit margin (2), calculate the net profit margin for both years showing your answer to two decimal places (4), and then comment on the result of your calculations for this firm (2).

Write down the formula for the Net Profit margin (2), calculate the net profit margin for both years showing your answer to two decimal places (4), and then comment on the result of your calculations for this firm (2).

Refer to the abstract of the Income Statement provided above and then restate this income statement for the two years by common sizing the values (express them as percentages to two decimal places) (12), and then comment on the items “Compensation and Benefits” (2) and “Fuel” (2).

Question 3:

A logistics company has employed a warehouse manager. His basic annual salary is R390 000 and he is entitled to an annual bonus of R30 000. The company operates a 40-hour week and employees are entitled to four weeks’ annual leave. There are 13 public holidays annually. Idle time is equal to 2% of available productive time.

The company contributes 7,5% and 1% of the basic salary towards the pension fund and UIF, respectively. Assume that there are 52 weeks in the year.

Calculate the following:

• Annual productive hours
• Total annual labour cost
• Hourly recovery rate

Question 4

CREATE (Pty) Ltd sold 2,880 units during the year for a total amount of R 3,225,600 and had total variable costs of R1,756,800. Total fixed costs amounted to R916,800.

Calculate the following:

4.1      The total contribution

4.2.     Break even quantity (BEQ)

4.3 Break even value (BEV) (4)

Total contribution if production was increased to 3,500 units

Answers to Above Question on Finance Management