MAC3761 ASSIGNMENT 3 SUGGESTED ANSWERS | DUE 31 AUGUST 2020

MAC3761 ASSIGNMENT 3
ANSWERS
SEMESTER 2 – 2020
DUE DATE: 31 AUGUST 2020

,PLAGIARISM
IS STRICTLY
PROHIBITED!

, QUESTION 1
(a)

(i) EBITDA margin = 𝑬𝑩𝑰𝑻𝑫𝑨 ∗ 𝟏𝟎𝟎
𝑹𝒆𝒗𝒆𝒏𝒖𝒆

(4 040 + 8 800 + 8 700 – 210)
2019 =[ ∗ 100]
212 500
= 𝟏𝟎. 𝟎𝟒%

(4 817 + 8 600 + 5 928 − 225)
2020 =[ ∗ 100]
280 000
= 𝟔. 𝟖𝟑%

Possible reason for the movement
The EBITDA margin reduced from 10.04% to 6.83%. The decrease might
have been caused by initial high operating costs for the new shops as the
business might embark on massive marketing campaigns for these new
businesses.

(ii) Interest cover = 𝑬𝑩𝑰𝑻
𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒏𝒂𝒏𝒄𝒆 𝑪𝒐𝒔𝒕

(4 040 + 8 700)
2019 =[ ]
(8 700+2 700)
= 𝟏. 𝟏𝟐 𝒕𝒊𝒎𝒆𝒔

(4 817 + 5 928)
2020 =[ ]
(5 928 + 3 325)
= 𝟏. 𝟏𝟔 𝒕𝒊𝒎𝒆𝒔

Possible reason for movement
The interest cover increased from 1.12times to 1.16times. The increase
might have been caused by the decrease in finance cost from R11 400
(8 700 + 2 700) to R9 253 (5 928 + 3 325).

(iii) Earnings yield = 𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆
∗ 𝟏𝟎𝟎
𝑴𝒂𝒓𝒌𝒆𝒕 𝒑𝒓𝒊𝒄𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆


Number of shares = 𝐵𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒
𝐼𝑠𝑠𝑢𝑒 𝑝𝑟𝑖𝑐𝑒

𝟑𝟎 𝟎𝟎𝟎 𝟎𝟎𝟎
=
𝟐𝟎


= 𝟏 𝟓𝟎𝟎 𝟎𝟎𝟎