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Parents Pricing Home NSC Accounting Cash Flow Statements Calculate the following financial indicators for the financial year ended 31 March 2021:
3.1.1 Debt-equity ratio
3.1.2 Net asset value per share
3.1.3 Dividend pay-out rate
3.1.4 Return on average shareholders' equity (ROSHO)
Complete the table in the ANSWER BOOK for the following items for the 2021 Cash Flow Statement
Calculate the following financial indicators for the financial year ended 31 March 2021:
3.1.1 Debt-equity ratio
3.1.2 Net asset value per share
3.1.3 Dividend pay-out rate
3.1.4 Return on average shareholders' equity (ROSHO)
Complete the table in the ANSWER BOOK for the following items for the 2021 Cash Flow Statement - NSC Accounting - Question 3 - 2021 - Paper 1 Question 3
View full question Calculate the following financial indicators for the financial year ended 31 March 2021:
3.1.1 Debt-equity ratio
3.1.2 Net asset value per share
3.1.3 Dividend pa... show full transcript
View marking scheme Worked Solution & Example Answer:Calculate the following financial indicators for the financial year ended 31 March 2021:
3.1.1 Debt-equity ratio
3.1.2 Net asset value per share
3.1.3 Dividend pay-out rate
3.1.4 Return on average shareholders' equity (ROSHO)
Complete the table in the ANSWER BOOK for the following items for the 2021 Cash Flow Statement - NSC Accounting - Question 3 - 2021 - Paper 1
3.1.1 Debt-equity ratio Only available for registered users.
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To calculate the debt-equity ratio, use the formula:
e x t D e b t − E q u i t y R a t i o = Total Debt Total Equity = 2 , 450 , 000 10 , 387 , 600 = 0.2 ext{Debt-Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}} = \frac{2,450,000}{10,387,600} = 0.2 e x t De b t − Eq u i t y R a t i o = Total Equity Total Debt = 10 , 387 , 600 2 , 450 , 000 = 0.2 This indicates that for every Rand of equity, there are 0.2 Rand of debt.
3.1.2 Net asset value per share Only available for registered users.
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The net asset value per share can be calculated using:
Net Asset Value per Share = Total Assets − Total Liabilities Number of Shares = 10 , 387 , 600 (Total Assets) 800 , 000 (Shares) = 1 , 298.5 e x t c e n t s p e r s h a r e \text{Net Asset Value per Share} = \frac{\text{Total Assets} - \text{Total Liabilities}}{\text{Number of Shares}} = \frac{10,387,600 \text{ (Total Assets)}}{800,000 \text{ (Shares)}} = 1,298.5 ext{ cents per share} Net Asset Value per Share = Number of Shares Total Assets − Total Liabilities = 800 , 000 (Shares) 10 , 387 , 600 (Total Assets) = 1 , 298.5 e x t ce n t s p ers ha re This means that each share has a net asset value of 1,298.5 cents.
3.1.3 Dividend pay-out rate Only available for registered users.
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To find the dividend pay-out rate, apply the formula:
Dividend Pay-out Rate = Dividends Paid Net Income × 100 = 579 , 000 2 , 870 , 000 × 100 = 20 % \text{Dividend Pay-out Rate} = \frac{\text{Dividends Paid}}{\text{Net Income}} \times 100 = \frac{579,000}{2,870,000} \times 100 = 20\% Dividend Pay-out Rate = Net Income Dividends Paid × 100 = 2 , 870 , 000 579 , 000 × 100 = 20% This shows that 20% of net income is paid out as dividends.
3.1.4 Return on average shareholders' equity (ROSHO) Only available for registered users.
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The Return on Average Shareholders' Equity can be computed as follows:
ROSHO = Net Income Average Shareholders’ Equity × 100 = 2 , 870 , 000 ( 10 , 387 , 600 + 6 , 910 , 000 ) / 2 × 100 = 33.2 % \text{ROSHO} = \frac{\text{Net Income}}{\text{Average Shareholders' Equity}} \times 100 = \frac{2,870,000}{(10,387,600 + 6,910,000) / 2} \times 100 = 33.2\% ROSHO = Average Shareholders’ Equity Net Income × 100 = ( 10 , 387 , 600 + 6 , 910 , 000 ) /2 2 , 870 , 000 × 100 = 33.2% This indicates a strong return on equity or profitability for the shareholders.
3.2.1 Change in receivables Only available for registered users.
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To determine the change in receivables, we subtract:
Change = 418 , 000 − 390 , 000 = 28 , 000 e x t ( O u t f l o w ) \text{Change} = 418,000 - 390,000 = 28,000 ext{ (Outflow)} Change = 418 , 000 − 390 , 000 = 28 , 000 e x t ( O u t f l o w ) This indicates a cash outflow due to an increase in receivables.
3.2.2 Change in payables Only available for registered users.
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For the change in payables, we calculate:
Change = 520 , 000 − 359 , 000 = 176 , 000 e x t ( I n f l o w ) \text{Change} = 520,000 - 359,000 = 176,000 ext{ (Inflow)} Change = 520 , 000 − 359 , 000 = 176 , 000 e x t ( I n f l o w ) This represents a cash inflow due to increased payables.
3.3.1 Taxation paid Only available for registered users.
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To find the taxation paid, use:
Taxation Paid = 1 , 085 , 000 − 124 , 000 − 354 , 000 = 607 , 000 e x t R a n d \text{Taxation Paid} = 1,085,000 - 124,000 - 354,000 = 607,000 ext{ Rand} Taxation Paid = 1 , 085 , 000 − 124 , 000 − 354 , 000 = 607 , 000 e x t R an d This indicates the total tax paid during the year.
3.3.2 Dividends paid Only available for registered users.
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The dividends paid can be calculated by:
Dividends Paid = 210 , 000 × 0.45 + 631 , 400 − 262 , 400 = 579 , 000 e x t R a n d \text{Dividends Paid} = 210,000 \times 0.45 + 631,400 - 262,400 = 579,000 ext{ Rand} Dividends Paid = 210 , 000 × 0.45 + 631 , 400 − 262 , 400 = 579 , 000 e x t R an d This indicates the total dividends distributed to shareholders.
3.3.3 Proceeds from sale of fixed assets Only available for registered users.
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To compute the proceeds from the sale of fixed assets:
Proceeds = 8 , 865 , 000 − 1 , 360 , 000 + 7 , 888 , 000 = 588 , 000 e x t R a n d \text{Proceeds} = 8,865,000 - 1,360,000 + 7,888,000 = 588,000 ext{ Rand} Proceeds = 8 , 865 , 000 − 1 , 360 , 000 + 7 , 888 , 000 = 588 , 000 e x t R an d This indicates cash generated from asset sales.
3.3.4 Funds used for the repurchase of shares Only available for registered users.
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Lastly, the funds used for the repurchase of shares can be calculated as:
Repurchase Funds = 20 , 000 × R 13.65 = 273 , 000 e x t R a n d \text{Repurchase Funds} = 20,000 \times R13.65 = 273,000 ext{ Rand} Repurchase Funds = 20 , 000 × R 13.65 = 273 , 000 e x t R an d This reflects the amount spent on buying back shares.
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