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FTL821S - FINANCIAL TECHNIQUES FOR LOGISTICS AND OPERATIONS MANAGEMENT - 2ND OPP - JAN 2023 |
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nAm I BI A un IVE RS ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTYOF COMMERCE,HUMANSCIENCEAND EDUCATION
DEPARTMENT OF MARKETING, LOGISTICSAND SPORTMANAGEMENT
QUALIFICATION: BACHELOR OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT HONOURS
QUALIFICATION CODE: 08LSCH
COURSE CODE: FTL821S
LEVEL: 8
COURSE NAME: FINANCIAL TECHNIQUES FOR LOGISTICS
MANAGEMENT OPERATIONS
SESSION: JANUARY 2023
PAPER: THEORY AND PRACTICAL
DURATION: 180 MINUTES
MARKS: 100
SUPPLEMENTARY/ SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER
Mr. Twiitedululeni Nakweenda
MODERATOR
Mr. Johannes Ndjuluwa
INSTRUCTIONS
1. This question paper consists of six pages including this cover page.
2. There are six questions in this paper, and all are compulsory.
3. Start with the question that you understand best, and please number all your answers
clearly, and correctly.
4. Avoid any form of academic dishonesty.
5. Where applicable, please show all your workings.
6. Students should use their intuitions to deal with any perceived ambiguities, and all
assumptions made should clearly be indicated as such.
7. For qualitative answers, the number of marks allocated should serve as the basis for the
length of your answer.
8. Unless otherwise stated, round off all your final answers to two decimal places.
9. The use of Financial Calculators or PV/FV is permitted.
10. Strictly, no pencil work shall be marked.
THE PAPERCONSISTOF 5 PAGESINCLUDING THIS COVERPAGE+ 1 PAGEOF PV & FV TABLES
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QUESTION 1:
(14 MARKS, 25 MINUTES)
There are various business forms that can be found in Namibia. Depending on the formation of such a
business, it can either be of a limited or unlimited liability. That is the reason why it is always important
for every procurement officer to know about this distinction before you enter into any contractual
obligations.
REQUIRED: Carefully, answer the following questions:
MARKS
(1.1.) Identify any three forms of business formations that can be found in Namibia, and
clearly state whether they are of limited or unlimited liability.
6
There are various stakeholders that can be interested in the business' performance.
One of such stakeholders are employees as they would want to ensure that their job
8
(1.2.) security is always guaranteed. Identify any four stakeholders that would also be
having interest in the business' performance, and clearly explain their direct
economic interest to such a business.
TOTAL MARKS FOR QUESTION 1
14
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QUESTION 2
(15 MARKS, 27 MINUTES)
As a procurement officer, it is important that you know how to assessnot only the liquidity of an entity,
but its profitability as well. This is a necessary practice because it influences your decision when it comes
to selecting a reliable supplier(s). The following is an extract from the financial records of two prospective
suppliers:
STATEMENTOF FINAl'CIAL POSffiON (EXTRACT) AS 31 DECEMBER2021
SUPPLIERA
N>N-ClRRENTASSETS:
568,840.00
Property, Plant and Equipment
568,840.00
SUPPLIERB
365,000.00
365,000.00
!CURRENTASSETS:
Inventory
Accounts receivable
Bank
TOTALASSETS
IEQlITTYAN) LIABILITIES:
TOTAL EQUITY
Share capital
Retained earnings
135,000.00
20,000.00
15,000.00
100,000.00
703,840.00
103,840.00 1
423,840.00
300,000.00
123,840.00
162,000.00
25,000.00
12,000.00
125,000.00
527,000.00
s21,ooo.oo 1
409,000.00
275,000.00
134,000.00
TOTAL LIABILITIES:
NON-CURRENTLIABILmES:
Interest bearing long-term liabilities
280,000.00
280,000.00
280,000.00
118,000.00
118,000.00
118,000.00
CURRENT LIABILmES:
Accounts payable
I 11,000.00
I 9,000.00
STATEMENTOF PRORT & LOSS(EXTRACT}FORTHEYEAR EN>ED31 DECEMBER2021:
SUPPLIERA
SUPPLIERB
Sales revenue
Cost of sales
800,000.00
- 520,000.00 -
735,000.00
514,500.00
Gross profit
280,000.00
220,500.00
Operating expenses:
-
98,000.00 -
99,225.00
Operating profit
182,000.00
121,275.00
Finance cost
-
10,000.00 -
8,000.00
Profit before tax
Taxation at 28%
172,000.00
-
48,160.00 -
113,275.00
31,717.00
Profit after tax
123,840.00
81,558.00
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REOURED: For each Suoolier, calculate the following ratios:
(2.1.) (i) Current ratio, and (ii) Quick ratio
(2.2.) (i) Gross orofit maroin, and (ii) Net profit margin
(2.3.) Based on your answers obtained in (2.1) to (2.2), which one of the two Suppliers
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4
5
would you recommend to your organization, and why?
TOTAL MARKS FOR QUESTION 2
15
QUESTION 3
(11 MARKS, 20 MINUTES)
For every entity, investing in a right security/asset is considered a crucial undertaking. Given the persisting
global economic crisis, majority of entities are resorting to a new normal especially those within the supply
chain management space. Suppose your organization is contemplating to invest in one of the following
mutually exclusive securities:
State of the economy
Normal
Boom
Recession
Probability
30%
50%
20%
Expected returns
Security A
Security B
16%
14%
19%
19%
-5%
-6%
REQUIRED: Carefully, answer the following questions:
(3.1.) On the basis of the expected return, which security would you recommend to
your organization?
{3.2.) On the basis of the standard deviation, which security would you recommend to
your organization?
{3.3.) Given your answers in (3.1) and (3.2), which one would you recommend to your
organization as a final basis of its investment choice?
TOTAL MARKS FOR QUESTION 3
MARKS
4
4
3
11
QUESTION 4
(21 MARKS, 38 MINUTES)
As a way of raising finance to finance capital projects, suppose your organization has issued a N$ 1 000
bond with a coupon rate of 4.75% per annum, and promises to pay back the principal in five years' time.
Suppose the current market interest rate on similar bonds is 8%.
REQUIRED: You are to advise your organization on the cheapest option:
(4.1.) Value of the bond today when coupons are paid annually.
(4.2.) Value of the bond today when coupons are paid half-yearly or bi-annually.
(4.3.) Value of the bond today when coupons are paid quarterly.
(4.4.) Value of the bond today when coupons are paid daily. (Assume 365 days calendar
year)
TOTAL MARKS FOR CALCULATIONS
RECOMMENDATION MARK
TOTAL MARKS FOR QUESTION 4
MARKS
5
5
5
5
20
1
21
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QUESTION 5
(25 MARKS, 45 MINUTES)
Consider the following mutually exclusive projects:
Initial investment
Expected cash inflows: Year 1
Year 2
Year3
Year4
Year 5
A
(N$50 000)
N$15 000
N$15 100
N$13 500
N$14 000
N$12 900
PROJECTS
B
C
(N$50 000)
(N$50 000)
N$18 000
N$14 000
N$11100
N$14 200
N$16 500
N$12 500
N$15 000
N$16 000
N$10 500
N$14 900
D
(N$50 000)
N$17 000
N$15 000
N$13 500
N$15 000
N$13 900
The appropriate cost of capital is 10%.
REQUIRED:
(5.1.) On the basis of NPV, which one of the four projects should be accepted.
(5.2.) On the basis of Profitability Index, which one of the four projects should be
accepted.
TOTAL MARKS FOR QUESTION 5
MARKS
20
5
25
QUESTION 6
(14 MARKS, 25 MINUTES)
REQUIRED:
(6.1.) Mention the five C's of credit, and briefly explain why each is important when it
comes to the process of screening a client.
(6.2.) Provide four reasons as to why entities should keep adequate stock.
TOTAL MARKS FOR QUESTION 6
MARKS
10
4
14
<«END OF QUESTION PAPER>»
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Table 4
Present value interest factor of an (ordinary) annuity of $1 per period at i¾ for n periods, PVIFA(i,n) = $1 *(1/(1+i)+ 1/(1+i)"2+ l/(l+i)"3 ... 1/(1+i)"n).
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
25
30
35
40
50
1%
0.990
1.970
2.941
3.902
4.853
5.795
6.728
7.652
8.566
9.471
10.368
11.255
12.134
13.004
13.865
14.718
15.562
16.398
17.226
18.046
22.023
25.808
29.409
32.835
39.196
2%
0.980
1.942
2.884
3.808
4.713
5.601
6.472
7.325
8.162
8.983
9.787
10.575
11.348
12.106
12.849
13.578
14.292
14.992
15.678
16.351
19.523
22.396
24.999
27.355
31.424
3%
0.971
1.913
2.829
3.717
4.580
5.417
6.230
7.020
7.786
8.530
9.253
9.954
10.635
11.296
11.938
12.561
13.166
13.754
14.324
14.877
17.413
19.600
21.487
23.115
25.730
4%
0.962
1.886
2.775
3.630
4.452
5.242
6.002
6.733
7.435
8.111
8.760
9.385
9.986
10.563
11.118
11.652
12.166
12.659
13.134
13.590
15.622
17.292
18.665
19.793
21.482
5%
0.952
1.859
2.723
3.546
4.329
5.076
5.786
6.463
7.108
7.722
8.306
8.863
9.394
9.899
10.380
10.838
11.274
11.690
12.085
12.462
14.094
15.372
16.374
17.159
18.256
6%
0.943
1.833
2.673
3.465
4.212
4.917
5.582
6.210
6.802
7.360
7.887
8.384
8.853
9.295
9.712
10.106
10.477
10.828
11.158
11.470
12.783
13.765
14.498
15.046
15.762
7%
0.935
1.808
2.624
3.387
4.100
4.767
5.389
5.971
6.515
7.024
7.499
7.943
8.358
8.745
9.108
9.447
9.763
10.059
10.336
10.594
11.654
12.409
12.948
13.332
13.801
8%
0.926
1.783
2.577
3.312
3.993
4.623
5.206
5.747
6.247
6.710
7.139
7.536
7.904
8.244
8.559
8.851
9.122
9.372
9.604
9.818
10.675
11.258
11.655
11.925
12.233
9%
0.917
1.759
2.531
3.240
3.890
4.486
5.033
5.535
5.995
6.418
6.805
7.161
7.487
7.786
8.061
8.313
8.544
8.756
8.950
9.129
9.823
10.274
10.567
10.757
10.962
10%
0.909
1.736
2.487
3.170
3.791
4.355
4.868
5.335
5.759
6.145
6.495
6.814
7.103
7.367
7.606
7.824
8.022
8.201
8.365
8.514
9.077
9.427
9.644
9.779
9.915
11%
0.901
1.713
2.444
3.102
3.696
4.231
4.712
5.146
5.537
5.889
6.207
6.492
6.750
6.982
7.191
7.379
7.549
7.702
7.839
7.963
8.422
8.694
8.855
8.951
9.042
12%
0.893
1.690
2.402
3.037
3.605
4.111
4.564
4.968
5.328
5.650
5.938
6.194
6.424
6.628
6.811
6.974
7.120
7.250
7.366
7.469
7.843
8.055
8.176
8.244
8.304
13%
0.885
1.668
2.361
2.974
3.517
3.998
4.423
4.799
5.132
5.426
5.687
5.918
6.122
6.302
6.462
6.604
6.729
6.840
6.938
7.025
7.330
7.496
7.586
7.634
7.675
14%
0.877
1.647
2.322
2.914
3.433
3.889
4.288
4.639
4.946
5.216
5.453
5.660
5.842
6.002
6.142
6.265
6.373
6.467
6.550
6.623
6.873
7.003
7.070
7.105
7.133
15%
0.870
1.626
2.283
2.855
3.352
3.784
4.160
4.487
4.772
5.019
5.234
5.421
5.583
5.724
5.847
5.954
6.047
6.128
6.198
6.259
6.464
6.566
6.617
6.642
6.661
16%
0.862
1.605
2.246
2.798
3.274
3.685
4.039
4.344
4.607
4.833
5.029
5.197
5.342
5.468
5.575
5.668
5.749
5.818
5.877
5.929
6.097
6.177
6.215
6.233
6.246
17% 18%
0.855 0.847
1.585 1.566
2.210 2.174
2.743 2.690
3.199 3.127
3.589 3.498
3.922 3.812
4.207 4.078
4.451 4.303
4.659 4.494
4.836 4.656
4.988 4.793
5.118 4.910
5.229 5.008
5.324 5.092
5.405 5.162
5.475 5.222
5.534 5.273
5.584 5.316
5.628 5.353
5.766 5.467
5.829 5.517
5.858 5.539
5.871 5.548
5.880 5.554
19%
0.840
1.547
2.140
2.639
3.058
3.410
3.706
3.954
4.163
4.339
4.486
4.611
4.715
4.802
4.876
4.938
4.990
5.033
5.070
5.101
5.195
5.235
5.251
5.258
5.262
20%
0.833
1.528
2.106
2.589
2.991
3.326
3.605
3.837
4.031
4.192
4.327
4.439
4.533
4.611
4.675
4.730
4.775
4.812
4.843
4.870
4.948
4.979
4.992
4.997
4.999