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FMG620S - FINANCIAL MANAGEMENT FOR NATURE CONSERVATION - 1ST OPP -NOV 2022 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF HEALTH, NATURAL RESOURCES AND APPLIED SCIENCES
DEPARTMENT OF AGRICULTURE AND NATURAL RESOURCES SCIENCES
QUALIFICATION: BACHELOROF NATURALRESOURCEMSANAGEMENT(NATURECONSERVATION)
QUALIFICATION CODE: 07BNRS
COURSE CODE: FMG620S
LEVEL: 6
COURSE NAME: FINANCIALMANAGEMENTFORNATURE
CONSERVATION
DATE: NOVEMBER 2022
DURATION: 3 HOURS
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S)
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 4 PAGES (Excluding this front page)
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Financial Management
FMG620S
QUESTION ONE
a. Give a concise description of the methods that are used to depreciate working assets.
[MARKS]
(6)
b. Consider a de-bushing equipment whose purchasing cost, terminal value, and useful life
are N$550,000, N$50,000, and 4 years. Using the sum-of-the-year depreciation method,
prepare a depreciation schedule for the de-bushing equipment. Your schedule should
(S)
show the annual depreciation expense, accumulate depreciation, and book value.
c. Suppose a farmer presents to you the following financial information about his bush-to-
feed operation.
item
Bush-to-feed output (in tons per hectare)
Price of bush-to-feed (in N$ per ton)
Direct cost (N$ per ton)
Overhead costs (N$ per ton)
Value
100
4,500
1,250
1,450
Use the data to answer the questions below.
i.
Estimate the net return (profit) per hectare.
(4)
ii.
Estimate the break-even price and break-even quantity.
(4)
iii.
Use the information to prepare an enterprise budget, whose base unit is per
bag. Assume a bag of bush-to-feed weighs 50 kilograms.
(6)
Total marks
[25)
First Oppo11unityExamination
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November 2022
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Financial Management
FMG620S
QUESTION TWO
[MARKS]
a. Give a concise description of the double entry system.
(5)
b. The accompanying table shows scrambled income statement and balance sheet
accounts for Conservancy for the year ended December 31, 2019.
Item
Sales revenue
Accounts payable
Accounts receivable
Marketing expense
Common stock
Accumulated Depreciation
Capital gain
Buildings and equipment
Cash
Cost of goods sold
Depreciation expense
General and administration
Inventories
Land
Long-term debts
Miscellaneous expenses
Interest expense
Notes payable
Equipment
Taxes
Retained earnings
Accruals
expenses
Value (N$),
December 31,
2019
160,000
22,000
25,000
16,000
32,000
32,000
7,500
90,000
1,500
106,000
10,000
10,000
45,500
26,000
94,450
1,000
6,100
47,000
116,000
4,360
26,550
50,000
i. Use the appropriate accounts to prepare an income statement for Conservancy for
the year ended December 31, 2019. The income statement should show all the
(lO)
relevant sections.
ii. Use the appropriate accounts to prepare a balance sheet for Conservancy for the
year ended December 31, 2019. The income statement should show all the relevant
(10)
sections.
TOTAL MARKS
[25]
First Opportunity Examination
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November 2022
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Financial Management
FMG620S
QUESTION THREE
[MARKS]
a. Suppose you have been asked to give a talk on financial statements to members of a
conservancy. Based on what you have learned in this course, what would be the main
(S}
points in your presentation?
b. A Community Forest recorded sales of N$60,000 in September. For the months of
October through December, Community Forest forecasts sales of N$70,000 per
month. At the beginning of October, the Community Forest had a cash balance of
N$30,000. Additional information about the timing of the cash receipts and payments
for Community Forest are as follows:
• The Community Forest receives 80% of its sales in cash and collects the
remaining 20% in the following month.
• Expected monthly cash purchases are estimated at N$45,000 for October
through December.
• Other monthly expenses are estimated at 20% of the current month's sales.
• A loan repayment of N$43,000 is due in November.
• A N$26,000 cash purchase of equipment is expected in October.
Using the information provided above, prepare a cash flow budget for Glen Enterprise
for the months of October, November, and December. Furthermore, based on the cash
flow budget you have prepared, estimate the cash deficit/surplus that is expected to
{20}
be experienced by the Community Forest during the period October to December.
TOTAL MARKS
[25]
First Oppo11unity Examination
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November 2022
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Financial Management
FMG620S
QUESTION FOUR
[MARKS]
a. The accompanying table shows financial data and ratios for the Games Product Trust
Fund for the accounting period ended 31 December 2021.
Sales revenue generated
Gross profit margin
Net profit margin
Return on Equity
Total asset turnover
N$800,000
90%
8%
20%
2 times
Based on solely on the information provided in the table above, estimate the dollar
values of the following income statement and balance sheet accounts:
i.
Total assets
(3)
ii.
Cost of goods sold
(3)
iii.
Total liabilities
(4)
b. A farmer bought a Toyota pick-up using a loan from a bank. The original principal
amount borrowed was N$600,000 and the annual interest was 10%. The loan is to be
repaid over 4-years period. Assuming that the loan is amortised into four equal annual
(4)
payment, prepare a loan amortization schedule showing the interest and principal
breakdown of each of the four annual loan payments.
c. An agribusiness SME is considering two mutually exclusive projects. Each requires an
initial investment of N$400,000. The accompanying table shows the after-tax cash
inflows associated with each project.
Year
1
2
3
4
Project A {N$)
150,000
150,000
150,000
150,000
Project B {N$)
200,000
300,000
50,000
50,000
i. Estimate the Payback Period for each project. Rank the projects based on their
Payback Period.
(4)
ii. Assuming a discount rate of 10%, calculate the NPV for each project. Rank the
project based on the calculated NPVs and select the best project. Explain your
(7)
answer.
TOTAL MARKS
(25]
THE END
First Opportunity Examination
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November 2022
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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(l + i)-n
PV = CF x [1-c1;0-"]
Financial Ratios
Sales
Asset turn = Total Assets
Current Assets-Inventory
Quick Ratio = current Liabilities
A verage
Co IIec t 1. 0n
p eno.
d
=
Accounts receivable
Average Sales per day
De btrat10.
Total liabilities
= -----
Total Assets
Sales
Asset turn=---
Total Assets
. Operating Profit
Net Profit Margm = ---~--
Sales
R eturn
on A ssets
=
-N--e-t--PTrootfailt
after taxes
Assets
Time value formulas
FV= PV(l + i)n
FV= CF x [(1+1i]t-
+ + + ...+ PV- P1
- (l+i)l
Pz
(l+i)Z
P3
(l+i)3
Pn
(l+i)"
FV= Pi(l + 0n-1 + P2(l + 0n-2 + ...+ Pn
Other Formulas
= Annual Depreciation (cost-salvage value)
useful life
A1111uaD/ epreciation = !n!.x BV
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 __!!!:_
SOYD
Where RL is the remaining life and SOYD = n(n+l)_
2
= Total cost
Break-even price Expected Output
= Break-even quantit.y
Total cost
Expected output price
First Oppo1iunity Examination
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November 2022