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FMA720S - FINANCIAL MANAGEMENT AGRICULTURE - 2ND OPP - JAN 2020 |
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9
NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
FACULTY OF NATURAL RESOURCE AND SPATIAL SCIENCES
DEPARTMENT OF AGRICULTURE & NATURAL RESOURCES SCIENCES
QUALIFICATION: BACHELOR OF AGRICULTURE
QUALIFICATION CODE: 27BAGR | LEVEL: 7
COURSE CODE: FMA 720S
COURSE NAME: FINANCIAL MANAGEMENT (AGRICULTURE)
DATE: January 2020
PAPER: THEORY
DURATION: 3 Hours
MARKS: 100
SECOND OPPORTUNITY / SUPPLEMENTARY EXAMINATION QUESTION PAPER
EXAMINER(S)
MODERATOR:
M. Lubinda
S. Kalundu
INSTRUCTIONS
Answer ALL four (4) questions.
Read all the questions carefully before answering.
Number your answers.
Make sure your student number appears on the answering script.
PERMISSIBLE MATERIALS
1. Examination paper.
2. Examination script.
3. Calculator
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
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Financial Management
FMA 720S
QUESTION ONE
a. Briefly discuss asset valuation. Your discussion should explain what asset valuation is
and the different asset valuation techniques.
b. Consider a tractor whose purchasing cost is NS550,000 and an estimated useful life
and terminal value of 10 years and N$50,000, respectively. Using the double-declining
balance method, prepare a depreciation ledger that shows annual depreciation,
accumulated depreciation, book value for the first four years.
c. Aconservancy is planning to start a Hoodia processing enterprise and has approached
you to assess the financial viability of the enterprise, in terms of profitability. The
conservancy plans to harvest and process 200 tons of hoodia each year, and each ton
is expected to be sold at NS2000. It anticipates the direct cost to be NS700 per ton on
labor and NS5OO per ton on other operating expenses. The conservancy’s only fixed
cost will be those associated with the use of a chipping and drying machine. The
purchasing costs of the machine are anticipated to be N$120,000, and the conservancy
expects to use it for five years at the end of which its value will be NS20,000. The
conservancy intends to use the straight-line method to estimate the annual cost of
using the equipment based on this information to answer the questions below.
[MARKS]
é
(6)
(6)
i.
Prepare an Enterprise Budget for Hoodia, with a base unit of per kilogram,
(9)
and state whether the enterprise financially feasible?
ii.
Estimate the break-even price (per kg) and break-even quantity (in kgs) for
(4)
the Hoodia enterprise.
TOTAL MARKS
[25]
Second Opportunity Examination
Page 2 of 6
January 2020
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Financial Management
FMA 7208S
QUESTION TWO
[MARKS]
a. On 31 Dec 2018, Amos Poultry LLP completed its first year in business. Suppose you
have just been employed as a Manager at Amos Poultry LLP, and your first assignment
is to prepare the company’s balance sheet for the financial year ended 31 Dec 2018.
To accomplish the task, the following information, on transactions that Amos Poultry
made in 2018, is provided to you:
The company received a cash investment of N$350,000 from its owners.
The company received N$300,000 loan from a bank. The company is obligated
to pay back the loan, with a 10% interest, in two equal annual payments.
A poultry house valued at N$450,000 was constructed using the company’s
money.
The first batch of day-old chicks worth N$100,000 was purchased.
Chicks worth NS20,000 died before being marketed.
Feed and vaccines for NS40,000 were purchased.
Sold all the surviving chickens in the first batch and made a cash profit of
NS160,000.
The second batch of day-old chicks worth NS120,000 were purchased.
At the end of 2018, the company owed its creditors NS80,000 from credit
purchases of inputs. The debt was structured as follows: 40% of it attracted
no interest, while 60% attracted interest. Payment on this debt was made in
the 2018 financial year.
At the end of 2018, accumulated depreciation was estimated at N$30,000.
Task: As a Manager, you have two options. The first option is to hire an accountant to
prepare the balance sheet for you and forfeit marks for this question. The second
option is to use the information provided to answer the questions below:
Prepare a balance sheet ledger and enter the transactions above using the
(15)
double-entry system.
Using the ledger, you have prepared in part b(i), generate a balance sheet for
Sori Sori conservancy for the financial year ended 31 December 2018.
(10)
TOTAL MARKS
[25]
Second Opportunity Examination
Page 3 of 6
January 2020
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Financial Management
FMA 7208
QUESTION THREE
[MARKS]
a. Describe the DuPont Analysis System, and briefly explain how you would use it to assess
'
the earning power of a company in terms of return on assets.
(5)
b. Briefly discuss the equity statement. Your discussion should highlight its structure,
.
purpose and use, and interpretation.
(5)
c. The accompanying table shows comparative balance sheets for ABC Ltd the financial
years 2017 and 2018. Use the information to answer the questions below.
“ASSETS
Cash
Accounts Receivable
Inventory
Net Fixed Assets
:
Total Assets ©
LIABILITIES AND EQUITY
Accounts payable
Notes payable
Long-term debt
Common stock
Retained earnings
Total Liabilities and Equity
130 |
200
470
700
1,500
330
270
300 |
100
500 ©
1,500
20
260
580
700
1,560
510
100
300
100
550
1,560
i. Use the indirect method to prepare and interpret the cash flow statement for
ABC Ltd for the 2018 financial year. Make sure you show all the steps of the
(10)
indirect method.
il. Use the indirect method to prepare and interpret the equity statement for ABC
.
Ltd for the 2018 financial year.
(5)
TOTAL MARKS
[25]
Second Opportunity Examination
Page 4 of 6
January 2020
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Financial Management
FMA 7208S
QUESTION FOUR
Assume you are a Manager for a Community Forest Project that supports the harvesting and
marketing of non-timber forestry products. Suppose one of the Community Forests your project
supports, is anticipating a large order for devil’s claw in January through April 2019. The
Community Forest would like to assess whether it will generate sufficient revenue to cover the
cost of the order. Suppose further that you have been provided with the following actual and
projections of cash inflows and cash outflows:
e Actual and Projected Cash Inflows
Credit Sales (Actual/Projected)
December
January
February
March
April
NS’000
90
120
100
80
110
[MARKS]
o The Community Forest’s average collection period on credit sales is 30 days.
e Projected Cash outflows
o Credit purchases of devil’s claws are expected to be 40 percent of the previous
month’s sales. Monthly purchases of devil’s claws are expected to be 40 percent
of last month’s sales. The average payment period of 30 days is expected on all
purchases
o Selling, general, and administrative expenses are projected to be N$90,000,
NS40,000, N$30,000, NS$40,000 from January through April.
o Other operating expenses are expected to be N$20,000 per month
Based solely on the projections above, and an assumed beginning cash balance of NS50,000 in
January, answer the following questions:
a. Prepare acash flow budget for the period January through April. Determine whether or not
borrowing will be necessary during the period, and if it is, when and for how much.
(20)
b. Suppose the Community Forest wishes to maintain at all times a minimum cash balance of
NS50,000. Determine whether or not borrowing will be necessary during the period, and if
(5)
it is, when and for how much.
TOTAL MARKS
[25]
Second Opportunity Examination
THE END
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January 2020
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