]]
⋆
FIN2601: FINANCIAL MANAGEMENT
May/June Examination 2026 — Comprehensive Revision Guide
Based on May/June 2025 & May/June 2024 Past Papers
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Finance, Risk Management & Banking — College of Economic & Management Sciences
Exam Revision Guide
FIN2601
Module Code:
Financial Management
Module Name:
May/June 2023 -May/June 2025
Paper / Exam:
May/June Examination 2026
Prepared for:
100 marks per paper
Total Marks:
2 hours
Duration:
Study to understand. Work through every calculation. Understand the why behind
each formula.
Exam Revision Notes | FIN2601 | University of South Africa
,FIN2601 | Financial Management – Exam Revision May/June 2025 & 2024
PAPER 1: MAY/JUNE 2025
Financial Management — FIN2601
Page 2 of 17
,FIN2601 | Financial Management – Exam Revision May/June 2025 & 2024
Question 1 [25 marks]
(a) [10 marks]
Question: Limpopo Logistics Ltd has the following financial data for the year ended 28
February 2025:
• Sales: R4 800 000
• Cost of goods sold: R2 880 000
• Operating expenses: R480 000
• Interest expense: R120 000
• Tax rate: 28%
• Total assets: R3 200 000
• Total equity: R1 920 000
• Current assets: R960 000
• Current liabilities: R480 000
• Inventory: R320 000
Calculate the following ratios and comment briefly on each: (i) Current ratio (ii) Quick ratio
(iii) Gross profit margin (iv) Net profit margin (v) Return on equity (ROE)
Answer: Step 1 — Calculate EBIT, EBT, and Net Profit:
Gross Profit = Sales − COGS = 4 800 000 − 2 880 000 = R1 920 000
EBIT = 1 920 000 − 480 000 = R1 440 000
EBT = 1 440 000 − 120 000 = R1 320 000
Tax = 1 320 000 × 0.28 = R369 600
Net Profit = 1 320 000 − 369 600 = R950 400
Step 2 — Calculate each ratio:
Page 3 of 17
, FIN2601 | Financial Management – Exam Revision May/June 2025 & 2024
Ratio Calculation Result & Comment
Current Assets 960 000
(i) Current Ratio = 2.0:1 — Good liquidity;
Current Liabilities 480 000
above the benchmark of
2:1.
960 000 − 320 000 640 000
(ii) Quick Ratio = 1.33:1 — Adequate;
480 000 480 000
above 1:1, company can
meet short-term obli-
gations without selling
inventory.
1 920 000
(iii) Gross Profit × 100 40% — For every R1 of
4 800 000
Margin sales, 40c remains after
direct costs.
950 400
(iv) Net Profit Mar- × 100 19.8% — Reasonable
4 800 000
gin profitability after all
deductions.
950 400
(v) ROE × 100 49.5% — Strong; share-
1 920 000
holders earn R0.495 for
every R1 invested.
Exam Tip
Always show the formula, substitute values, and state whether the result is favourable
or unfavourable. One mark is typically awarded per correct ratio and one for the
comment.
(b) [5 marks]
Question: Distinguish between the liquidity and profitability objectives of financial man-
agement and explain why they may conflict. (5 marks)
Answer: Liquidity refers to a firm’s ability to meet short-term financial obligations as they
fall due. It focuses on maintaining sufficient current assets (especially cash) to pay creditors
on time.
Page 4 of 17
⋆
FIN2601: FINANCIAL MANAGEMENT
May/June Examination 2026 — Comprehensive Revision Guide
Based on May/June 2025 & May/June 2024 Past Papers
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Finance, Risk Management & Banking — College of Economic & Management Sciences
Exam Revision Guide
FIN2601
Module Code:
Financial Management
Module Name:
May/June 2023 -May/June 2025
Paper / Exam:
May/June Examination 2026
Prepared for:
100 marks per paper
Total Marks:
2 hours
Duration:
Study to understand. Work through every calculation. Understand the why behind
each formula.
Exam Revision Notes | FIN2601 | University of South Africa
,FIN2601 | Financial Management – Exam Revision May/June 2025 & 2024
PAPER 1: MAY/JUNE 2025
Financial Management — FIN2601
Page 2 of 17
,FIN2601 | Financial Management – Exam Revision May/June 2025 & 2024
Question 1 [25 marks]
(a) [10 marks]
Question: Limpopo Logistics Ltd has the following financial data for the year ended 28
February 2025:
• Sales: R4 800 000
• Cost of goods sold: R2 880 000
• Operating expenses: R480 000
• Interest expense: R120 000
• Tax rate: 28%
• Total assets: R3 200 000
• Total equity: R1 920 000
• Current assets: R960 000
• Current liabilities: R480 000
• Inventory: R320 000
Calculate the following ratios and comment briefly on each: (i) Current ratio (ii) Quick ratio
(iii) Gross profit margin (iv) Net profit margin (v) Return on equity (ROE)
Answer: Step 1 — Calculate EBIT, EBT, and Net Profit:
Gross Profit = Sales − COGS = 4 800 000 − 2 880 000 = R1 920 000
EBIT = 1 920 000 − 480 000 = R1 440 000
EBT = 1 440 000 − 120 000 = R1 320 000
Tax = 1 320 000 × 0.28 = R369 600
Net Profit = 1 320 000 − 369 600 = R950 400
Step 2 — Calculate each ratio:
Page 3 of 17
, FIN2601 | Financial Management – Exam Revision May/June 2025 & 2024
Ratio Calculation Result & Comment
Current Assets 960 000
(i) Current Ratio = 2.0:1 — Good liquidity;
Current Liabilities 480 000
above the benchmark of
2:1.
960 000 − 320 000 640 000
(ii) Quick Ratio = 1.33:1 — Adequate;
480 000 480 000
above 1:1, company can
meet short-term obli-
gations without selling
inventory.
1 920 000
(iii) Gross Profit × 100 40% — For every R1 of
4 800 000
Margin sales, 40c remains after
direct costs.
950 400
(iv) Net Profit Mar- × 100 19.8% — Reasonable
4 800 000
gin profitability after all
deductions.
950 400
(v) ROE × 100 49.5% — Strong; share-
1 920 000
holders earn R0.495 for
every R1 invested.
Exam Tip
Always show the formula, substitute values, and state whether the result is favourable
or unfavourable. One mark is typically awarded per correct ratio and one for the
comment.
(b) [5 marks]
Question: Distinguish between the liquidity and profitability objectives of financial man-
agement and explain why they may conflict. (5 marks)
Answer: Liquidity refers to a firm’s ability to meet short-term financial obligations as they
fall due. It focuses on maintaining sufficient current assets (especially cash) to pay creditors
on time.
Page 4 of 17
