Prepare the Retained Income Note for the year ended 28 February 2023 - NSC Accounting - Question 2 - 2023 - Paper 1

The proceeds from shares issued comprise the funds raised through new shares. Calculation is as follows:

1. New shares issued: 1 370 000 shares at R11.40 each.
2. Proceeds from shares issued: 1 370 000 x R11.40 = R15 618 000

This results in an amount of R3 420 000.

Proceeds from shares issued = Number of shares x Price per share = 1 370 000 x R11.40 = R15 618 000

For the cash effects of operating activities, we summarize the cash flows:

1. Cash generated from operations: R2 340 000
2. Interest paid: R648 000
3. Income tax paid: R719 700
4. Dividends paid: R579 800

The total cash effects of operating activities will be structured as:

Cash generated from operations                         R2 340 000
Less: Interest paid                                   (R648 000)
Less: Income tax paid                                 (R719 700)
Less: Dividends paid                                  (R579 800)

Total cash effects of operating activities             R155 200

The current ratio is an indicator of liquidity, calculated as:

1. Current Assets: R1 479 600
2. Current Liabilities: R822 000
3. Current Ratio: ( \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} )
4. Calculation: ( \text{Current Ratio} = \frac{1 479 600}{822 000} \approx 1.8 )

Thus, the current ratio is 1.8.

Net Asset Value (NAV) provides insight into the company’s worth, calculated as follows:

1. Total Assets: R13 959 500
2. Total Liabilities: R629 600
3. Net Asset Value (NAV): ( \text{NAV} = \text{Total Assets} - \text{Total Liabilities} )

Substituting values: [ \text{NAV} = 13 959 500 - 629 600 = 13 329 900 ]

The final value is R1 064.9 cents.

To calculate the % return on total capital employed (ROTCE), use the following steps:

1. Net Profit After Tax: R1 526 000
2. Average Capital Employed: R20 343 500
3. ROTCE Calculation: ( \text{ROTCE} = \left(\frac{\text{Net Profit after tax}}{\text{Average Capital Employed}}\right) \times 100 )

Substituting values gives: [ \text{ROTCE} = \left(\frac{1 526 000}{20 343 500}\right) \times 100 \approx 7.5% ]

So, the % return on capital employed is approximately 7.5%.