HIGHER CERTIFICATE IN BUSINESS MANAGEMENT

FUNDAMENTALS OF FINANCIAL MANAGEMENT

ASSIGNMENT

INTRODUCTION TO THE ASSIGNMENT

• This assignment consists of FOUR questions.

• Answer all of them.

• We wish you success.

HCBM_FFM_ASG_2023 © Regenesys Business School 1

ASSIGNMENT QUESTIONS

QUESTION 1 [15 MARKS]

You are a recent graduate and want to start saving for retirement. You plan to save R2,000 per year
for the next 15 years. After that you will stop contributing and just allow your savings to accumulate
for another 20 years. Your twin brother would rather wait before he starts saving. He will not put away
anything for the next 10 years, then he will start making contributions at the end of each year for the
final 25 years. You both expect to earn a 9.5% rate of return on your investments. How much must
your brother put away at the end of each year to have the same amount of money for retirement as
you?

QUESTION 2 [20 MARKS]

You are considering buying a new home. The house you are looking at costs R120,000 and you plan
to make a 10% down payment. You check with a bank and it has two home loan options for you. The
first is a 15-year mortgage at 6.25%. The second is a 30-year mortgage at 6.50%.

2.1.1 What are your monthly payments for each loan? (6)

2.1.2 What is the total you will pay over the life of the loan for each loan? (2)

2.1.3 After one year you get a job transfer and have to sell the house. What is the payoff value of
your remaining loan balance (Hint: Find PV of remaining payments)? (6)

2.1.4 Over the first year, how much did you pay in principal and how much did you pay in
interest? (6)

HCBM_FFM_ASG_2023 © Regenesys Business School 2

QUESTION 3 [15 MARKS]

KHOZA LTD

The financial year ended on 28 February 2022.

INFORMATION:

A. Share Capital

The business has an authorised share capital of 1,125,000 ordinary shares.

The total issued share capital on 28 February 2021 was 600,000 ordinary shares.

75,000 ordinary shares were issued on 1 March 2021.

B. Extract from the Income Statement on 28 February 2022:

Sales 7,728,000
Cost of sales (4,830,000)
Gross profit 2,898,000
Operating income 0
Operating expenses (1,506,960)
Operating profit 1,777,440
Interest expense (200,940)
Net profit before income tax 1,576,500
Income tax (472,950)
Net profit after income tax 1,103,550

C. Information from the Balance Sheet on 28 February 2022:

28/02/2022 28/2/2021
Non-current assets 10,421,550 9,566,100
Fixed assets 10,121,550 9,266,100
Financial assets 300,000 300,000
Current assets 1 459 800 1,588,050
Inventories 627,000 482,550
Trade debtors 825,000 712,500
Cash and cash equivalents 7,800 393,000
Shareholders’ equity 9,336,000 7,641,750
Ordinary share capital 8,741,250 7,440,000
Retained income 594,750 201,750
Non-current liabilities 1,500,000 2,400,000
Current liabilities 1,045,350 1,112,400
Trade creditors 616,800 932,400
Shareholders for dividends 330,000 180,000
Bank overdraft 98,550 0

HCBM_FFM_ASG_2023 © Regenesys Business School 3

D. An interim dividend of R270,000 was paid and a final dividend was declared.

E. Credit sales amount to 30% of the total sales. Credit purchases amounted to R3,622,500.

Required:

3.1 Use the information above to calculate the following financial indicators.

3.1.1 Gross profit margin (5)

3.1.2 Current ratio (4)

3.1.3 Dividends per share (6)

QUESTION 4 [50 MARKS]

Visit a business in your area and, with the permission of the owners or manager, spend a day
observing the following with the financial manager of the organisation:

• A day in the life of the financial manager from opening to closing time for at least one day;
• Outline the framework for financial reporting within the business;
• Interview the financial manager to gain insight into his or her financial planning techniques
(budgeting and variance analysis, cash planning and budgeting); and
• Assess the value of this business by analysing and interpreting financial statements, including
the statement of financial position, statement of comprehensive income, and statement of cash
flows.

Write a four-page report based on the following:

4.1 An analysis of the core functions of the financial manager and his or her team, based on the
observations of their duties. (25)

4.2 A detailed description, with evidence, of the business’ framework for financial reporting processes
and how this impacts other key functions of the business. (25)

HCBM_FFM_ASG_2023 © Regenesys Business School 4

 SCORING
TOPIC QUESTION POOR ROOM TO ADEQUATE PROFICIENT MASTERLY
NUMBER DEVELOP
CRITERIA
An analysis of 4.1 Little-to-no attempt Some attempt Clear attempt The core functions of Critical evaluation of
the core made to made to made to financial manager core functions of
functions of analyse the core analyse the analyse the core and their team are financial manager
financial functions of core functions functions of identified and and the identification
manager and financial manager of financial financial manager analysed. At least and analysis of their
their team. and their team. No manager and and their team. At three insights into team. At least four
demonstration of their team. At least two insights financial planning insights into financial
insight into least one into financial techniques are planning techniques
financial planning insight into planning discussed in detail are discussed in
techniques. financial techniques are with respect to the detail to the role of
planning discussed in role of the financial the financial function
techniques is some depth. function as a whole as a whole and within
elaborated on and within the the broader
even if broader organisation. organisation and
superficial. wider ecosystem.

SCORING
TOPIC QUESTION POOR ROOM TO ADEQUATE PROFICIENT MASTERLY
NUMBER DEVELOP
CRITERIA
A detailed Little-to-no The student The student The business’ An objective but
description, 4.2 description of the attempts to attempts to framework for thorough assessment
with evidence, business’ describe the describe the financial reporting of the business’
of the framework for business’ business’ processes is framework for
business’ financial reporting framework for framework for described with real financial reporting
framework for processes financial financial reporting life examples processes is
financial provided. Little-to- reporting processes with provided from their described with real-
reporting no evidence processes. real life examples time spent shadowing life examples
processes provided from the However no provided from the financial provided from their
business as examples are their time spent manager. time spent shadowing
requested in the provided. shadowing the the financial
question. financial manager.
manager.

HCBM_FFM_ASG_2023 © Regenesys Business School 5