MAC2602 Semester 2 Department of Management Accounting

MULTIPLE CHOICE QUESTIONS FOR ASSIGNMENT: COMPULSORY ASSIGNMENT 01/2022 FOR THE SECOND SEMESTER MULTIPLE CHOICE QUESTIONS (60 marks) Set your calculator on four decimal places for this assignment ALL QUESTIONS ARE COMPULSORY FOR ASSIGNMENT 01/2022 FOR THE SECOND SEMESTER 1. All Glow (Pty) Ltd are financed as follows: 20 million ordinary shares of R2 each R 5 000 debentures of R1 000 each R 5 000 000 Retained income R Long-term loans R Calculate the debt: equity ratio (based on book values). [Round your final answer to two decimal places.] (a) 68,32:31,68 (b) 74,53:25,47 (c) 31,68:68,32 (d) 25,47:74,53 (3) 2. Green Power (Pty) Ltd supplied the following information: The total amount of credit purchases relating to inventory for the year were R440 600. The balance for trade payables was R64 500. Inventory days were 120 and receivable days were 55. Use 365 days per year. They want to know the length of time between the outflow and inflow of cash. Calculate the number of days of the total cash conversion cycle. (a) 67 days (b) 122 days (c) 108 days (d) 175 days (3) 3. Which ONE of the following ratios would be most appropriate to compare the profitability of two companies that operate in the same industry? (a) Interest Cover (b) Earnings per share (EPS) (c) Price/ Earnings (P/E) (d) Asset turnover ratio (3) This study source was downloaded by from CourseH on :18:43 GMT -05:00 MAC2602/Assignment01/2/2022 4 4. Which ONE of the following is NOT an advantage of short-term financing? (a) Short-term financing can generally be obtained much faster than long-term financing. (b) It may not be necessary to offer collateral for short-term financing. (c) The interest expense may fluctuate more on the short-term. (d) The term is for a short period, and it can be obtained for the organisation’s periodic needs without committing for long periods. (3) 5. Which combination of statements refer to the transformed and evolved functions of financial management? (1) Direct involvement in the development of strategy. (2) Direct involvement in the implementation of strategy. (3) Managing business performance. (4) Managing business risk. (5) Specific focus on financing and investment decisions. (a) Statements (2), (3) and (4) (b) Statements (1), (2) and (5) (c) Statements (1), (2), (3) and (4) (d) Statements (2), (3), (4) and (5) (3) 6. The following information regarding Ethiopi company is available: The risk-free rate of return is 3%, the average market return for all shares is 7%, and the share’s beta factor is 0.6. What is the cost of equity (Ke) as percentage? [Set your calculator at four decimals and round your final answer to two decimals.] (a) 7,42% (b) 2,52% (c) 54,00% (d) 5,40% (3) 7. Growth rate refers to the increase or decrease from one period to another. Calculate the growth rate for revenue of R980 million (previous period: R780 million) and growth rate for operating cost of R23 million (previous period: R55 million). (a) Revenue 25,64% decline; Operating cost 58,18% growth (b) Revenue 25,64% growth; Operating cost 58,18% decline (c) Revenue 20,41% growth; Operating cost 139,13% decline (d) Revenue 20,41% decline; Operating cost 139,13% growth (3) This study source was downloaded by from CourseH on :18:43 GMT -05:00 MAC2602/001/2/2022 5 8. The can be used to estimate the cost of equity, on the assumption that the market value of shares is directly related to the expected future dividends on the shares. (a) Beta factor (b) Dividend growth rate (c) Dividend growth model (d) Capital asset pricing model (3) 9. Which TWO of the following are examples of connected stakeholders? (1) Customers (2) Suppliers (3) Managers (4) Executive directors (a) Statements (3) and (4) (b) Statements (1) and (2) (c) Statements (3) and (2) (d) Statements (1) and (3) (3) 10. The CEO of Techno Ltd stated at a recent company meeting that the company has a responsibility to consider other stakeholders and ensure that the company minimises any negative impacts to the company. Which ONE of the following best describes the external environmental factor that influence the development of strategy that was referred to by the CEO? (a) Economic environment (b) Political environment (c) Technological environment (d) Social environment (3) 11. When considering Porters five forces model, which ONE of the following would be evidence of high bargaining power of suppliers? (a) The threat of a lot of alternatives or substitute products. (b) The existence of many suppliers of the same product. (c) The supplier’s product is not differentiated. (d) The buyers/customers are not important to the supplier – they are relatively small compared to the supplier. (3) This study source was downloaded by from CourseH on :18:43 GMT -05:00 MAC2602/Assignment01/2/2022 6 12. Which ONE of the following is NOT a strategic aim of corporate governance? (a) To reduce costs within the organisation. (b) To improve investor confidence in the organisation. (c) To increase the organisation’s transparency to stakeholders. (d) To ensure that the organisation abides with relevant laws and acts ethically. (3) 13. Home Products (Pty) Ltd’s mission statement is “to offer good service to all the customers”. The mission statement has recently been created by senior management but has not been communicated to the rest of the staff. Which ONE of the following benefits is Home Products most likely to see from its new mission statement in the short term? (a) Improved image to customers (b) Improved decision-making strategies (c) Improved awareness amongst stakeholders of Home Products (d) Rapid corporate culture change in Home Products staff to focus on quality (3) 14. John invested R18 000 in an account that pays 6% simple interest per year. What is the amount of the total interest that John will have received at the end of four years? (a) R43 200 (b) R 1 080 (c) R22 320 (d) R 4 320 (3) 15. Which of ONE of the following risk related factors is NOT a factor that affect the cost of equity of an organisation? (a) Specific risk (b) Market risk (c) Business risk (d) Premium for cost of debt (3) 16. Sibongile would like to invest R80 000 at the end of each year at an annual compound interest rate of 15%. Determine the value of the investment after five years by using the mathematical formula. [Set your calculator at four decimals and round your final answer to the nearest rand.] Take note: There will be rounding differences of +/- R25 if you use your financial calculator instead of the mathematical formula as was specifically required. (a) R367 445 (b) R539 416 (c) R 53 942 (d) R 80 912 (3) This study source was downloaded by from CourseH on :18:43 GMT -05:0