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FMA721S - FINANCIAL MANAGEMENT FOR AGRICULTURE - 2ND OPP - JAN 2023 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE Ano TECHnOLOGY
FACULTYOF HEALTH,NATURAL RESOURCESAND APPLIEDSCIENCES
DEPARTMENT OF AGRICULTURE AND NATURAL RESOURCES SCIENCES
QUALIFICATION: BACHELOR OF SCIENCE IN AGRICULTURE
QUALIFICATION CODE:
07BAGA
COURSE CODE: FMA720S/FMA712S
LEVEL: 7
COURSE NAME: FINANCIAL MANAGEMENT
FOR AGRICULTURE
DATE: JANUARY 2023
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER($)
M LUBINDA
MODERATOR:
S KALUNDU
INSTRUCTIONS
1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number the answers clearly.
PERMISSIBLE MATERIALS
1. Examination question paper
2. Answering book
3. Calculator
THIS QUESTION PAPER CONSISTS OF 5 PAGES (Excluding this front page)
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Financial Management
FMA720S
QUESTION ONE
[MARKS]
a. Briefly describe three main types of business forms.
(6)
b. Consider a tractor whose purchasing cost and useful life are N$150,000 and 4 years,
respectively. Use the double decline balance method to prepare a depreciation schedule
(S)
for the tractor for the first four years.
c. Suppose the farmer provides you with the following information about his onion
production enterprise.
Enterprise budget item
Production (in tons per hectare)
Price (in N$ per ton)
Direct cost (N$ per ton)
Overhead costs (N$ per ton)
Onion enterprise
35
7,500
3,500
2,100
Use the data to answer the questions below.
i.
Determine the net return (profit) per hectare.
(4)
ii.
Calculate the break-even price and break-even quantity in each enterprise.
(4)
iii.
Prepare and interpret an enterprise budget whose base unit per bag.
Assume a bag of onion weighs 10 kgs.
(6)
Total marks
[25]
Second Opportunity Examination
Page 2 of6
January 2023
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Financial Management
FMA720S
QUESTION TWO
a. Briefly describe the cash flow statement.
[MARKS]
(5)
b. Consider the following comparative balance sheets for Amos Poultry cc. for the financial
years ended 31 December 2019 and 2020, respectively. Use the information to prepare
and interpret a cash flow statement for the period ended 31 December 2019.
Comparative Balance Sheets for Amos Poultry cc.
December 31 (N$)
2019
2020
Assets
Cash
22 200
24 000
Accounts receivable
34100
42 200
Inventories
82 000
50000
Total current assets
138 300
116 200
Gross fixed assets
Less:Accumulated depreciation
415 000
445 000
(20)
145 000
160 000
Net fixed assets
270 000
285,000
Total assets
408 300
401200
Liabilities and Equity
Accounts payable
57 000
49 000
Notes payable
13 000
16 000
Accruals
5 000
6 000
Total current liabilities
75 000
71000
Long-term debt
150 000
160 000
Total liabilities
225,000
231,000
Common stock
110 200
110 200
Retained earnings
73100
60000
Total Equity
183 300
170 200
Total liabilities and Equity
408 300
401200
TOTAL MARKS
(25)
Second Oppot1unity Examination
Page3of6
January 2023
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Financial Management
FMA720S
QUESTION THREE
a. Briefly discuss the four key areas of financial performance evaluation.
[MARKS]
{8)
b. Consider the following comparative balance sheets and income statement (selected
accounts) for Amos Poultry cc. for the financial years ended 31 December 2019 and
2020, respectively. Use the information to answer the questions below.
Comparative Balance Sheets for Amos Poultry cc.
December 31 (N$)
2019
2020
Assets
Cash
22 200
24 000
Accounts receivable
34100
42 200
Inventories
82 000
50000
Total current assets
138300
116 200
Gross fixed assets
415 000
445 000
Less: Accumulated depreciation
145 000
160 000
Net fixed assets
270 000
285,000
Total assets
408 300
401200
Liabilities and Equity
Accounts payable
57 000
49 000
Notes payable
13 000
16 000
Accruals
5 000
6000
Total current liabilities
75 000
71000
Long-term debt
150 000
160 000
Total liabilities
225,000
231,000
Common stock
110 200
110 200
Retained earnings
73100
60000
Total Equity
183 300
170 200
Total liabilities and Equity
408 300
401200
Comparative Balance Sheets for Amos Poultry cc.
Sales
Cost of goods sold
Operating profit
Net Profit
December 31 (N$)
2019
2020
960,000
890,000
560,000
490,000
300,000
200,000
120,000
160,000
i.
Prepare a common-sized balance sheet for the accounting period ended
31 December 2020.
(5)
ii.
Based solely on the information provided, conduct a complete ratio
analysis to identify areas where Amos Poultry cc. needs to improve and
areas where Amos Poultry performed well. (Hint: use 2019 as a
(12)
benchmark; and use accounting ratios that can be computed from the
information provided.)
TOTAL MARKS
[25]
Second Opportunity Examination
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January 2023
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Financial Management
FMA720S
QUESTION FOUR
a. Briefly explain the concept of time value of money and its application in investment
analysis.
[MARKS]
(5)
b. A farmer wishes to accumulate N$250,000 by the end of 5 years by making equal annual
end-of-year deposit over the next 5 years. If the farmer can earn 7% on her investment,
(4)
how much must she deposit at the end of each year to meet this goal?
c. Amortize a loan with an original principal amount of N$300,000; annual interest of 10%;
and maturity period of 5-years. Your amortization schedule should show the interest
(5)
and principal components of each of the five annual loan payments.
d. An agribusiness SME is considering two mutually exclusive investments. Each
investment requires an initial cost of N$450,000 and has a maturity period of four years.
The first investment is expected to generate N$ 150,000 per year in net cash inflows;
while the second investment will generate N$190,000, N$160,000, N$130,000, and
N$100,000 in net cash inflows from the first year through the fourth year, respectively.
Use this information to answer the questions below.
i. Estimate the Payback Period for each investment. Rank the investments based on
their Payback Period. Explain the rationale that informed your ranking of the
(4)
investments.
ii. Assuming a discount rate of 10%, calculate the NPV for each investment. Rank the
investments based on the calculated NPVs. Explain the rationale that informed your
(7)
ranking of the investments.
TOTAL MARKS
[25]
THE END
Second Oppo1tunity Examination
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January 2023
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Current Ratio = Current Assets
Current Liabilities
Inventory turn = Cost of goods sold
Inventory
Gross Profit Margin = Gross Profit
Total Sales
Average Payment Period = Accounts payable
Average purchases per day
Times interest earned ratio = Net profit before interest and tax
Interest expense
Operating Profit Margin = Operating Profit
Sales
= Return on Equity Net Profit after taxes
Total Equity
PV= FV(1 + i)-n
PV = CF X[l-(l;1i1])-
Financial Ratios
Asset turn = ----Sales
Total Assets
= . QUI.C k RatI.O
Current Assets-Inventory
Current Liabilities
Average CoIIect1. 0n pen.o d = AAvcecraoguentssarIeecseipvearbldeay
Debt
rat1.0
=
-T-o-t-a-l liabilities
Total Assets
Asset turn=---- Sales
Total Assets
= Net Profi1tMarg1. 11
Operating Profit
Sa1es
= Return on A ssets
Net Profit after taxes
Tota 1Assets
Time value formulas
FV= PV(1 + i)n
FV= CF x [(1+1i]t-
+ + + PV - --.!.1._
+
- (l+i)l
(l+i)Z (l+i)3
..·
(l+i)11
FV= P1(l + i)n-1 + P2(l + i)n-2 + ...+ Pn
Other Formulas
= Annual Depreciation (cost-salvage value)
useful life
Annual Depreciation=!!.. x BV
1l
Where R is decline balance rate; n is useful life; and BY is the book value at the
beginning of the year.
Sum-of-the-year digits= (cost - salvage value) x siio
Where RL is the remaining life and SOYD = 11(11+ 1)_
2
= Total cost
Break-even price Expected Output
= Break-even quantit.y
Total cost
Expecte d output price
Second Oppmtunity Examination
Page 6 of6
January 2023