FIN3702/101/3/2019

Tutorial Letter 101/3/2019

WORKING CAPITAL MANAGEMENT

FIN3702
Semesters 1 and 2
Department of Finance,
Risk Management and Banking

IMPORTANT INFORMATION

Please register as a user of myUnisa as soon as possible. It is free of charge. Visit https://my.unisa.ac.za
for details. At myUnisa, you will be able to get in touch with fellow students, submit your assignments,
update your details, as well as participate in discussion forums. Therefore, activate your myUnisa and
myLife e-mail accounts and ensure that you have regular access to the myUnisa module site for FIN3702-
2019, S1E or S2E in order to interact with your module e-tutors too. It is also important that you provide
Unisa with your cellular number because important announcements may be sent to you via SMS.

Please note that from 2018 onwards, this module will be offered online and in ENGLISH only. All
material will be made available on myUnisa under the “Official Study Material” tab and/or under
“Learning Units”. However, in order to facilitate the learning process, some study material will be
available in printed format.

This module carries 12 credits and requires 120 notional hours of study, including the time required to
complete the assignments and the examination. Devote at least 120 hours to this module to ensure your
success.

BARCODE

Open Rubric
 CONTENTS

Page

1 INTRODUCTION .......................................................................................................................... 3
2 PURPOSE AND OUTCOMES ...................................................................................................... 3
2.1 Purpose ........................................................................................................................................ 3
2.2 Outcomes ..................................................................................................................................... 3
3 LECTURER(S) AND CONTACT DETAILS................................................................................... 4
3.1 Lecturer(s) .................................................................................................................................... 4
3.2 Department ................................................................................................................................... 4
3.3 University ...................................................................................................................................... 5
4 RESOURCES ............................................................................................................................... 5
4.1 Prescribed books .......................................................................................................................... 5
4.2 Recommended books ................................................................................................................... 5
4.3 Electronic reserves (e-reserves) ................................................................................................... 5
4.4 Library services and resources information ................................................................................... 5
5 STUDENT SUPPORT SERVICES ................................................................................................ 6
6 STUDY PLAN ............................................................................................................................... 6
7 PRACTICAL WORK AND WORK-INTEGRATED LEARNING ..................................................... 6
8 ASSESSMENT ............................................................................................................................. 7
8.1 Assessment criteria....................................................................................................................... 7
8.2 Assessment plan .......................................................................................................................... 7
8.3 Assignment numbers .................................................................................................................... 8
8.3.1 General assignment numbers ....................................................................................................... 8
8.3.2 Unique assignment numbers ........................................................................................................ 8
8.4 Assignment due dates……………………………………………………………………………………..8

8.5 Submission of assignments .......................................................................................................... 8

8.6 The assignments .......................................................................................................................... 9
8.7 Other assessment methods ........................................................................................................ 34
8.8 The examination ......................................................................................................................... 34
9 FREQUENTLY ASKED QUESTIONS ........................................................................................ 34
10 SOURCES CONSULTED ........................................................................................................... 34
11 IN CLOSING ............................................................................................................................... 34

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 FIN3702/101/3/2019

1 INTRODUCTION
Dear Student
Welcome to the module, Working Capital Management (FIN3702). You have enrolled for an
interesting, but challenging module. In order to pass the module, you will need to devote at least
two hours per day to reading and summarising, as well as practicing the calculations. With this
in mind, we hope that you will enjoy this module.
To get started
Please note that this module is presented fully online and therefore you need to go online to
view your study material and complete the learning activities for this course. Go to the website,
https://my.unisa.ac.za, and login with your student number and password. You will see the
FIN3702-19-S1/S2 module site in the row of modules in the orange blocks across the top of the
web page. Remember to also check in the “more sites” tab if you cannot find it in the orange
blocks. Click on the module that you want to open and read the Welcome Page.
We wish you success on your academic journey!

2 PURPOSE AND OUTCOMES

2.1 Purpose
The purpose of this module is to equip you with the necessary skills and knowledge required to
manage cash flows within a business, do financial planning and manage the working capital of a
business efficiently. To attain these outcomes, you will be expected to understand the
underlying theories and principles in working capital management and apply these to the
practical work environment through practical case-study scenarios pertaining to a business.
Please note that this module covers only three chapters in the prescribed book with
some topics adequately supplemented by notes in the study guide. Therefore, we expect
you to cover this material within a reasonable time in order to complete your
assignments and prepare for the examination. You will be expected to cover the relevant
study units in your study guide, in conjunction with the prescribed chapters, to complete
your assignments (see section 8.4.1).
2.2 Outcomes
On completion of this module, you should be able to do the following:

 Demonstrate a knowledge and understanding of cash flows and financial planning within
an organisation, with emphasis on the operational plan of the business
 Interpret net working capital fundamentals
 Demonstrate a knowledge and understanding of the functioning of the cash conversion
cycle
 Demonstrate a knowledge and understanding of the management of inventory
 Demonstrate a knowledge and understanding of the management of accounts receivable
 Demonstrate a sound knowledge and understanding of short-term financing through
current liabilities

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3 LECTURER(S) AND CONTACT DETAILS
3.1 Lecturer(s)
Any enquiries of an academic nature concerning this module, such as an enquiry about specific
content within your prescribed book, study guide and/or assignment may be directed to:

LECTURER CONTACT DETAILS OFFICE NUMBER

012 429 4684
E-mail: kasozjs@unisa.ac.za AJH van der Walt Building
Mr SJ Kasozi
Fax2e-mail: 086 569 8844 5-86
Skype: Kashogij1
012 429 6333 Samuel Pauw Building 5-
Mr KS Choenyana
E-mail: choenks@unisa.ac.za AV 92

Please note that telephonic inquiries may only be done during office hours. Our
availability schedules for both telephonic and online interactions are as follows:

Lecturer Online availability on myUnisa Telephonic enquiries

Mr SJ Kasozi Monday-Wednesday (2.00 pm - 4.00 pm) All weekdays (2.00 pm – 4.00
pm)
Mr KS Thursday (9.00 am – 12.00 pm) All weekdays (9.00 am –
Choenyana 12.00 pm)

LECTURER(S) AVAILABILITY
The lecturer(s) for this module will be available to take phone calls on academic matters and/or
to attend to students who may prefer to visit personally for academic engagement. However, the
days and times of the lecturer’s availability will be communicated in the module page on
myUnisa. These days and times are subject to change from time to time in order to
accommodate the lecturer’s work schedule and other commitments. The changes on the days
and times will be communicated by the lecturer(s) in advance through the Announcements
option on myUnisa as and when this happens. Students are advised to check the module page
on myUnisa before making phone calls or visiting the lecturer’s office for academic
enquiries/engagements.
3.2 Department
Academic staff members from the Department of Finance, Risk Management and Banking
(DFRB) present this module.

Please note that you may get in touch with fellow students, download study material, submit
assignments, change your address and/or examination venue, view your assignment marks,
download previous examination papers and get in touch with your lecturer at
https://my.unisa.ac.za.

You may also call 012 429 3603 for academic enquiries.

E-mail queries may be sent to finman@unisa.ac.za.

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3.3 University
Administrative queries may be directed to the appropriate department as indicated in the Study
@ Unisa brochure. Examples of administrative queries are registration matters, study material
matters, account queries and graduation issues. Registration matters must be directed to
econ@unisa.ac.za.

4 RESOURCES
4.1 Prescribed books
You must acquire one of the following prescribed books from one of the official Unisa
booksellers. A list of booksellers is available on myUnisa.
Gitman, LJ, Smith, BM, Hall, J, Marx, J, Strydom, B, Mestry, R, Malan, M, Ngwenya, S &
Makina, D. 2014. Principles of managerial finance: global and Southern African perspectives.
2nd edition. Cape Town: Pearson. ISBN number: 978-1-775-78887-4.
or
Gitman, LJ, Smith, BM, Hall, J, Lowies, B, Marx, J, Strydom, B & Van der Merwe, A. 2010.
Principles of managerial finance: global and Southern African perspectives. 1st edition. Cape
Town: Pearson. ISBN number: 978-1-770-25502-9.
4.2 Recommended books
Els, G, Erasmus, P & Viviers, S. 2014. Corporate finance: a South African perspective, 2nd
edition. SA: Oxford University Press.
4.3 Electronic reserves (e-reserves)
There are currently no electronic reserves for this module. However, we encourage you to
register on myUnisa and use the online support that will be provided from time to time and to
interact with fellow students on the discussion forums for this module. This module is
undergoing a transition from print material (hard copy mode of delivery) to online instruction. We
are in the process of developing more online resources for this module and expect all registered
students to use or participate in it. Therefore, we encourage you to register on myUnisa in order
to benefit from this new open and online distance learning environment.
4.4 Library services and resources information
For brief information, go to www.unisa.ac.za/brochures/studies.

For detailed information, go to http://www.unisa.ac.za/library. For research support and services

of personal librarians, click on “Research support".

The library has compiled a number of library guides:

 finding recommended reading in the print collection and e-reserves –

http://libguides.unisa.ac.za/request/undergrad
 requesting material – http://libguides.unisa.ac.za/request/request
 postgraduate information services – http://libguides.unisa.ac.za/request/postgrad

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 finding, obtaining and using library resources and tools to assist in doing research –
http://libguides.unisa.ac.za/Research_Skills
 how to contact the library/finding us on social media/frequently asked questions –
http://libguides.unisa.ac.za/ask

5 STUDENT SUPPORT SERVICES

Important support information about this module appears in the Study @ Unisa brochure and
other tutorial letters that you can download or will receive during the course of the year.

PREDATORY PROVIDERS OF CLASSES AND EXAMINATION INFORMATION

Please be aware of the existence of multiple fraudulent and predatory providers of classes and
examination guidance to Unisa students. Please note that Unisa does not have agreements
with any of these agencies/schools/colleges to provide tuition or support to our students. Also,
Unisa does not provide these predators with study material, guidelines or your contact
information.
These providers may not have the necessary expertise to assist you and often charge
exorbitant fees. If you receive an invitation from any agency or college, it is best to confirm with
your lecturer whether the provider is a legitimate Unisa partner.

TVET AGREEMENTS
However, Unisa has agreements with a number of TVET colleges to provide contact tuition and
support for students in the following higher certificates:
Higher Certificate in Economic and Management Sciences
Higher Certificate in Banking
Higher Certificate in Tourism
Higher Certificate in Accounting Sciences

6 STUDY PLAN
Use the Study @ Unisa brochure for general time management and planning skills. We are
aware of the fact that many students have to study under very difficult circumstances. We urge
you to begin studying early and to plan your studies to fit in with your own work and domestic
circumstances. At this level, students are expected to prove that they can study independently.
Therefore, you should draw up your own study plan that suits your needs. However, please
ensure that you devote at least two hours per day to reading and revising the contents of this
module.

7 PRACTICAL WORK AND WORK-INTEGRATED LEARNING

This module has no specific practical work or work integrated learning. However, in order for us
to improve your “graduateness” and enhance your career development in the workplace, we
would like to encourage you to perform all the activities that are recommended in your study
guide. These activities require you to apply the financial knowledge you have acquired to the
practical setting in which you are; whether at your work place or internship. Such knowledge will
enable you to fully appreciate the fundamental values of financial management in your business
or setting.

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8 ASSESSMENT
8.1 Assessment criteria
Your year mark, based on the mark obtained for the two compulsory assignments, contributes
20% towards your final mark, while your examination mark contributes 80% to your final mark.
The combined weighted average of your year mark and examination mark must be 50% or
higher for you to pass the module. However, for this year mark to apply, you must obtain a
minimum of 40% in the examination. If you obtain less than 40% in the examination, your year
mark will not be taken into account and you will fail.
For example:
Assignment 01 mark = 50%, Assignment 02 mark = 90%. Each of these assignments
contributes 50% towards the final year mark of 20%.

Assignment number Mark Weight Total

Assignment 01 50% 50% 25
Assignment 02 90% 50% 45
70 x 20% = 14% year mark

Assume an examination mark of 55%

80% (0.8) of the examination mark = [55% x 0.8] = 44%
Final mark = (20% assignment mark) + (80% examination mark)
= 14% + 44% = 58%

You will need a final mark of at least 40% in order to qualify for a supplementary examination.
For general information and requirements as far as assignments are concerned, see the
brochure, Study @ Unisa, which you received with your study material.
8.2 Assessment plan
Assignments are seen as part of the learning material for this module. As you do the
assignments, study the reading texts, consult other resources, discuss the work with fellow
students or tutors/e-tutors, or do research, as you are actively engaged in learning. By paying
attention to the assessment criteria for each assignment, you will understand more clearly what
is required of you.
You may submit assignments done on mark-reading sheets, but we prefer electronic
submission via myUnisa as this ensures that your assignments do not get misplaced in the mail.
Assignments may not be submitted by fax or e-mail. Please ensure that you keep a copy of your
submitted assignment at all times. For detailed information and requirements regarding
assignments, see the brochure, Study @ Unisa, that you received with your study material.

Compulsory assignments

There are two compulsory assignments for this module and both assignments are in the form
of multiple-choice questions. Both assignments should preferably be submitted online via
myUnisa. There are non-negotiable submission deadlines for each of these assignments and
you must submit the first of these assignments if you wish to gain entry into the examination.
Please note that the average from both of these assignments contributes towards your year
mark and you are therefore encouraged to submit both the assignments.

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8.3 Assignment numbers
8.3.1 General assignment numbers
Assignments are numbered consecutively per module, starting from 01, 02 and so on.
8.3.2 Unique assignment numbers
Each assignment has been allocated a unique number in order to identify it on the Unisa
assessment plans. Please ensure that you always indicate the correct unique number when
submitting assignments.
8.4 Assignment due dates
As indicated earlier, you should preferably submit your assignments at https://my.unisa.ac.za
prior to the due date of each assignment. Do not wait until the day just before the due date.
Technical problems with the computer servers of myUnisa may prevent you from submitting
your assignment at the last minute.
If you are unable to submit your assignments online via myUnisa and need to mail them in hard
copy format to us. Please ensure that posted assignments reach the Unisa main campus by the
due dates. Requests for extension of due dates for assignments will not be granted. These due
dates have been set to allow you sufficient time for the completion of the assignments and to
provide you with adequate time to prepare for the examination.
Information about whether Unisa has received your assignment and the mark attained for
an assignment can be obtained from https://my.unisa.ac.za
8.5 Submission of assignments
Multiple-choice assignments may be submitted in one of three ways: either via the internet by
using myUnisa or via cellphone or by means of a mark-reading sheet that you submit via the
postal service.
To submit an assignment via myUnisa:

 Go to myUnisa at https://my.unisa.ac.za.
 Log in with your student number and password.
 Select the module.
 Click on Assignments in the left-hand menu.
 Click on the assignment number you want to submit.
 Follow the instructions on the screen.

To submit an assignment by means of an SMS from your cellphone:

 Download the Unisa Mobile application from https://my.unisa.ac.za/portal/pda.

 Install and activate the application on your phone.
 Select the "MCQ assignment" option.
 Login with your myUnisa credentials.
 Select your module.
 Select the appropriate unique assignment number.
 Select appropriate answers to the assignment questions.
 Send your answers.
 Receive immediate on-screen confirmation.

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Only submit your assignment by means of a mark-reading sheet and mail it to Unisa if you do
not have access to the internet. If you are using a mark-reading sheet, remember the following:
1. Use an HB pencil.
2. Indicate your student number and the assignment’s unique number on the mark-reading
sheet.
3. Follow the instructions for completing mark-reading sheets. Incomplete mark-reading
sheets will be returned to you unmarked.
4. Submit the assignment in good time. It must reach the Unisa main campus on or before
the deadline dates indicated for the assignments below. Otherwise it might not be in time
to be marked by the assignment section.

Please submit your assignment through mail by means of a mark-reading sheet (for multiple-
choice questions) or hard paper copy (for essay-type questions) only if you do not have access
to the internet. We strongly encourage you to use the myUnisa online platform to avoid
unexpected situations like the loss of your assignment, postal delays, and so forth.
8.6 The assignments
Please note that assignments constitute a fundamental part of your formative learning process.
Therefore, you must endeavour to complete and submit them. These assignments are set with
the intention to, as much as possible, cover all the learning outcomes for this module. Whether
or not this effort is attained, we expect you to individually cover and achieve all the learning
outcomes of this module as spelt out in this tutorial letter (part 2.4). Therefore, you must not
necessarily use these assignments as an indication of what to expect in the examination, rather,
make an effort to ensure that you cover all the learning outcomes before the examination. This
can be achieved by working through your assignment questions, study guide questions, past
examination papers (where applicable) and relevant questions in your prescribed book.
Therefore, we do not provide the scope for the examination as we expect you to have covered
all the learning outcomes.

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8.6.1 Semester 1

Kindly note that there are two compulsory assignments for the first semester of this
module. Both assignments constitute only multiple-choice questions. The average mark
of both these assignments will be used to calculate your year mark. We advise you to
submit both these assignments online via myUnisa.

ASSIGNMENT 01 (compulsory)
20 MULTIPLE-CHOICE QUESTIONS (20 marks)
DUE DATE: 22 March 2019
UNIQUE NUMBER: 689783

AIM: The purpose of this assignment is to evaluate your knowledge regarding the
fundamental aspects of cash flow management, financial planning, working capital
management and the management of current assets and/or liabilities. To complete this
assignment, you must study chapters 3, 14 and 15 of your prescribed book and the
relevant study units in your study guide.

Answer the following questions and submit your assignment at https://my.unisa.ac.za.

QUESTION 1

The cash flows from the operating activities section of the statement of cash flows considers …

1. taxes paid.
2. dividends paid.
3. labour expense.
4. interest expense.

QUESTION 2

All of the following are inflows of cash EXCEPT …

1. increase in accruals.
2. net profits after taxes.
3. a decrease in accounts receivable.
4. an increase in accounts receivable.

QUESTION 3
In general, firms that are subject to a high degree of …, relatively short production cycles, or
both, tend to use shorter planning horizons.

1. profitability
2. financial certainty
3. financial planning
4. operating uncertainty

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QUESTION 4
Gold Trust Bank Ltd has offered a manufacturing company the following alternatives in
response to the R275 000 one-year loan application made to the bank.

 alternative 1: 15% discount interest, with an 8% compensating balance

 alternative 2: 16% simple interest with interest paid monthly

What will the effective annual rate be if this company chooses to take the cheaper alternative?

1. 13.63%
2. 16.45%
3. 17.22%
4. 19.48%

QUESTION 5
Home Supplies Ltd maintains an average inventory of 2 500 desks to supply to schools. The
carrying cost per desk is estimated at R1.25. Betty places an order for 5 000 desks on the first
day of each quarter and the order cost is R80. What will Betty’s carrying cost be if her firm uses
the EOQ method of inventory management?

1. R 894
2. R1 215
3. R2 500
4. R3 125

QUESTION 6
When a firm initiates or increases a cash discount, sales are expected to …, the investment in
accounts receivable is expected to …, the bad debts expense is expected to … and the profit
per unit is expected to …

1. decrease; increase; increase; increase.

2. decrease; decrease; increase; increase.
3. increase; increase; decrease; decrease.
4. increase; decrease; decrease; decrease.

QUESTION 7
Nedbank Ltd has offered Rice Cookies Ltd the following in response to a R100 000 one-year
loan application which was made to the bank. The stated rate was 6% with a 20%
compensating balance. What will the effective annual rate be?

1. 7.50%
2. 8.40%
3. 8.75%
4. 11.25%

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QUESTION 8
Rene Zellwager purchased inventory to the value of R100 000. The terms of sale were 3/15 net
45. What is the effective annual interest rate if he paid the full amount in 45 days? Assume 365
days in a year.
1. 28.00%
2. 37.60%
3. 44.90%
4. 44.30%

QUESTION 9

The key output(s) of the short-run financial planning process are a (n) …

1. sales forecasts and cash budget.

2. cash budget, sales forecast and income statement.
3. income statement, balance sheet, source and use statement.
4. cash budget, pro forma income statement and pro forma balance sheet.

QUESTION 10

A firm which uses the aggressive financing strategy plans to purchase a major fixed asset
financed with a loan. The most likely consequence of this action is …

1. an increase in long-term debt.

2. a decrease in the current ratio.
3. an increase in the net working capital.
4. a decrease in the risk of technical insolvency.

QUESTION 11

The … inventory contains the basic components of the production process.

1. capital goods
2. raw materials
3. finished goods
4. work-in-progress

QUESTION 12

A firm's credit terms cover all of the following EXCEPT …

1. credit period.
2. cash discount.
3. credit standards.
4. cash discounts period.

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QUESTION 13

The … float is the delay between the receipt of a check and the actual deposit of the check into
the firm's account.

1. deposit
2. clearing
3. processing
4. disbursement

QUESTION 14

Fashionista Ltd’s total sales are R600 000, 90% of which are made on credit. The receivables
turnover is four days. Based on a 365-day year, the average collection period and year-end
receivables are closest to …

1. 73 days and R108 000.

2. 73 days and R120 000.
3. 91 days and R135 000.
4. 365 days and R120 000.

QUESTION 15

Choomex Ltd has issued a R1 000 000 commercial paper for R989 000 for 60 days. Based on
this information and assuming a 365-day year, the effective annual rate of interest on the
commercial paper would be …

1. 5.65%.
2. 6.95%.
3. 7.61%.
4. 8.13%.

QUESTION 16

On average, a firm sells R2 000 000 in merchandise per month. It keeps inventory equal to half
of its monthly sales on hand at all times. If this firm analyses its accounts using a 365-day year,
its average age of inventory will be …

1. 10.5 days.
2. 15.2 days.
3. 30.3 days.
4. 182.5 days.

The next two questions apply to the information provided below:

Yoyos and Us Ltd is analysing the performance of its cash management department. The store
has an inventory turnover of 7.2, an average payment period of 40 days and an average
collection period of 60 days. The store’s annual outlay is R2 500 000 (assume a 365-day year).

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QUESTION 17

The firm’s cash conversion cycle is…

1. 50.69 days.
2. 60.31 days.
3. 70.69 days.
4. 110.69 days.

QUESTION 18

The amount required to support Yoyos and Us’s cash conversion cycle is…

1. R 6 849.
2. R 484 178.
3. R2 500 000.
4. R2 506 849.

QUESTION 19

Pledges of accounts receivable and factoring of accounts receivable are made on … basis,
respectively.

1. a notification and a recourse

2. a non-recourse and a notification
3. a notification and a non-recourse
4. a non-notification and a notification

QUESTION 20

If the firm decides to take the cash discount that is offered on goods purchased on credit, the
firm should …

1. pay as soon as possible.

2. pay on the last day of the credit period.
3. pay on the last day of the discount period.
4. take the discount no matter when the firm actually pays.

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ASSIGNMENT 02 (compulsory)
20 MULTIPLE-CHOICE QUESTIONS (20 marks)
DUE DATE: 26 April 2019
UNIQUE NUMBER: 764955

AIM: The purpose of this assignment is to evaluate your knowledge of the fundamental
aspects of cash flow management, financial planning, working capital management and
the management of current assets and/or liabilities. To complete this assignment, you
must study chapters 3, 14 and 15 of your prescribed book and the relevant study units in
your study guide.

Answer the following questions and submit your assignment at https://my.unisa.ac.za.

QUESTION 1

Tamil Traders Ltd was extended credit terms of 1/10 net 70. The cost of giving up the cash
discount, assuming a 365-day year is …

1. 6.27%.
2. 7.20%.
3. 12.26%.
4. 14.89%.

QUESTION 2
Ruby Jewellers Ltd had actual sales of R200 000 in November and projected sales in
December and January of R300 000 and R360 000, respectively. During the month of sale,
40% of sales are collected, 50% are collected in the month following the month of sale and 10%
is collected two months after the month of sale. Given this information, the firm’s total expected
credit receipts in January are …

1. R 80 000.
2. R157 000.
3. R220 000.
4. R314 000.

The information below applies to the next three questions.

Deals, Inc currently makes all art sales on credit and offers no cash discount. The firm is
considering a 3% cash discount for payment within 10 days. The firm's current average
collection period is 90 days, sales are 400 art pieces per year and selling price is R25 000 per
art piece. Variable cost per item is R18 750 and the average cost per item is R21 000. The firm
expects that the change in credit terms will result in a minor increase in sales of 10 items per
year, that 75% of the sales will be subjected to the discount, and the average collection period
will drop to 30 days. The firm's bad debt expense is expected to become negligible under the
proposed plan. The bad debt expense is currently 0.5% of sales. The firm's required return on
equal-risk investments is 20%.

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QUESTION 3

What is the firm’s marginal profit contribution under the proposed plan?

1. R 22 500
2. R 40 000
3. R 62 500
4. R100 000

QUESTION 4

What is the cost of marginal investment in accounts receivable under the proposed plan?

1. R246 875
2. R276 500
3. R313 460
4. R368 314

QUESTION 5

What are the savings from marginal bad debts under the proposed plan?
1. R 5 000
2. R 10 000
3. R 50 000
4. R500 000

QUESTION 6

A firm has prepared the coming year’s pro forma statement of financial position resulting in a
plug figure of R230 000. Based on this information, the firm should prepare to …

1. arrange for a loan of R230 000

2. do nothing as the statement balances
3. repurchase ordinary shares totalling R230 000
4. invest in marketable securities work R230 000

QUESTION 7
Trending Ltd had net fixed assets of R2 000 000 at the end of 2018 and R1 820 000 at the end
of 2017. In addition, the firm had a depreciation expense of R20 000 during 2018 and R18 000
during 2017. Using this information, the firm’s net fixed asset investment for 2018 was...
1. R180 000.
2. R200 000.
3. R380 000.
4. R400 000.

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QUESTION 8

Relative to cash flows affecting net working capital, all of the following are true EXCEPT …

1. cash outlays for current liabilities are relatively predictable.

2. cash inflows are generally more predictable than cash outlays.
3. the more predictable the cash inflows, the less net working capital a firm needs.
4. because firms are unable to match cash inflows and outflows with certainty, current
assets that more than cover outflows for current liabilities are necessary.

QUESTION 9

The conversion of current assets from inventory to receivables to cash provides the … of cash
used to pay the current liabilities, which represents a (n) … of cash.

1. use; source
2. source; use
3. outflow; inflow
4. inflow; outflow

QUESTION 10

In the aggressive financing strategy, a firm anticipating a large increase in sales should finance
the increase in working capital with a …

1. line of credit.
2. sale of a bond issue.
3. sell of ordinary shares.
4. long-term note from the bank.

QUESTION 11

The credit policy of House and Home Ltd is 2/10 net 30. At present, 25% of customers take
advantage of the discount, 55% pay within the net period, and the remainder pay within 42 days
of the invoice. What will the effect on receivables be if all customers take the discount?

1. lower than the present level

2. higher than the present level
3. no change from the present level
4. cannot be determined

QUESTION 12

Ayaya Telecommunications Ltd has a receivables turnover of 20.3, a payables turnover of 9.8
and an inventory turnover of 19.2. What is the approximate length of the firm’s operating cycle?
Assume 365 days in a year.

1. 15 days
2. 22 days
3. 37 days
4. 59 days

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QUESTION 13

The prime rate of interest fluctuates with the …

1. demand in the bond market.

2. risk of the firm borrowing the funds.
3. changing demand and supply relationship for long-term funds.
4. changing demand and supply relationship for short-term funds.

QUESTION 14

If a firm uses an aggressive financing strategy, it …

1. increases return and decreases risk.

2. increases return and increases risk.
3. decreases return and increases risk.
4. decreases return and decreases risk.

QUESTION 15

A firm has notes payable of R1 904 762, long-term debt of R12 000 000, and a total interest
expense of R1 400 000. If the firm pays 9% interest on its long-term debt, approximately what
rate of interest does it pay on its notes payable?

1. 8.20%
2. 13.10%
3. 15.30%
4. 16.80%

The information below applies to the next four questions

PH Internet Café in Phokeng expects to have sales of R15 million under its current credit policy
this year. The present terms are net 30 days and the average collection period is 60 days; the
bad debt loss percentage is 5%. The company’s cost of capital is 15% and its variable costs
total 60% of the sales. The company now needs to improve its profitability and a proposal has
been made to offer a 2% discount for payments within 10 days, that is, change the credit terms
to 2/10 net 30. The consultants predict that sales would increase by R500 000 and that 50% of
ALL customers would take the discount. The new average collection period would be 30 days
and the bad debts loss percentage on all sales would fall to 4%.

QUESTION 16

Calculate the cost to the company of the discounts taken.

1. -R108 750.
2. R116 750.
3. R155 000.
4. R225 000.

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QUESTION 17

What would the incremental bad debt losses be if these changes were made?

1. -R130 000
2. R130 000
3. -R250 000
4. R250 000

QUESTION 18

What would the incremental cost of carrying receivables be if the changes were made? HINT:
cost of carrying receivables = average collection period x (sales/day) x (variable cost ratio) x
(cost of funds).

1. -R108 750
2. R116 250
3. R157 900
4. -R225 000

QUESTION 19

What are the incremental pre-tax profits from this proposal?

1. R250 500
2. R288 250
3. R283 750
4. R303 250

QUESTION 20

Kitaka Aleper Complex Ltd arranged a R10 000 000 revolving credit agreement with a group of
small banks. The firm paid an annual commitment fee of one-half of a per cent on the unused
portion of this loan and paid 1.5% above prime for funds actually borrowed on a simple interest
basis. The prime rate was at 9% for that year. If this firm borrowed R5 000 000 immediately
after the loan agreement was signed and repaid the loan after one year, what was the total rand
cost of the loan agreement for one year (assume 365 days in a year)?

1. R550 000
2. R560 000
3. R650 000
4. R675 000

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8.6.2 Semester 2

Kindly note that there are two compulsory assignments for the second semester of this
module. Both assignments constitute only multiple-choice questions. The average mark
of both these assignments will be used to calculate your year mark. We advise you to
submit both these assignments online via myUnisa.

ASSIGNMENT 01 (compulsory)
20 MULTIPLE-CHOICE QUESTIONS (20 marks)
DUE DATE: 13 September 2019
UNIQUE NUMBER: 625482

AIM: The purpose of this assignment is to evaluate your knowledge of the fundamental
aspects of cash flow management, financial planning, working capital management and
the management of current assets and/or liabilities. To complete this assignment, you
must study chapters 3, 14 and 15 of your prescribed book and the relevant study units in
your study guide.

Answer the following questions and submit your assignment at https://my.unisa.ac.za.

QUESTION 1

A firm with highly unpredictable sales revenue would best choose … financing strategy in order
to minimise risk.
1. a seasonal
2. the trade-off
3. the aggressive
4. the conservative

QUESTION 2

Once sales are forecasted, … must be generated in order to estimate a variety of operating
costs.

1. a cash budget
2. a production plan
3. an operating budget
4. a pro forma statement

QUESTION 3

A firm has a cash conversion cycle of 70 days. Annual outlays are R22.5 million and the cost of
negotiated financing is 9.66%. If the firm reduces its average age of inventory by 12 days, the
annual saving will approximately be … (assume 365 days per year).

1. R 40 000.
2. R 55 578.
3. R 71 458.
4. R104 000.

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 FIN3702/101/3/2019

QUESTION 4

In the month of August, a firm had total cash receipts of R10 000, total cash disbursements of
R8 000, depreciation expense of R1 000, a minimum cash balance of R3 000 and a beginning
cash balance of R500. The ending cash balance for August totals …

1. -R 500.
2. R1 500.
3. R2 500.
4 R5 500.

QUESTION 5

For the year ended 31 December 2017, a corporation had cash flow from operating activities of
R12 000, cash flow from investment activities of -R10 000 and cash flow from financing
activities of R4 000. The statement of cash flows for this firm would show a …

1. net increase of R2 000 in cash and marketable securities.

2. net increase of R6 000 in cash and marketable securities.
3. net decrease of R6 000 in cash and marketable securities.
4. net decrease of R18 000 in cash and marketable securities.

QUESTION 6

The Peliswa Corporation had net current assets of R2 000 000 at the end of 2018 and
R1 800 000 at the end of 2017. In addition, this corporation had net spontaneous current
liabilities of R1 000 000 in 2018, R1 500 000 in 2017 and R1 400 000 and R1 000 000 of short-
term borrowings in 2018 and 2017, respectively. Using this information, the corporation’s net
current assets investment for 2018 was …

1. -R100 000.
2. -R300 000.
3. R300 000.
4. R700 000.

QUESTION 7

A firm expects to have funds of R150 000 idle for 60 days. If the firm could purchase marketable
securities yielding 10% and pay brokerage fees of R1 500, the firm should … (assume 365 days
in a year).

1. leave the R150 000 in liquid cash.

2. invest the funds for more than 60 days due to the favourable rate.
3. make the investment since interest earned exceeds brokerage fees.
4. make the investment since brokerage fees exceed interest earned.

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QUESTION 8

In the next planning period, a firm plans to change its policy of all cash sales and initiate a credit
policy requiring payment within 30 days. The statements that will be directly affected
immediately are the …

1. pro forma balance sheet and cash budget.

2. cash budget and statement of retained earnings.
3. pro forma income statement and pro forma balance sheet.
4. pro forma income statement, pro forma balance sheet and cash budget.

QUESTION 9

A firm has actual sales in November of R1 000 and projected sales in December and January of
R3 000 and R4 000, respectively. The firm makes 10% of its sales in cash, collects 40% of its
sales one month following the sale, and collects the balance two months following the sale. The
firm earns a rental income of R200 in January. Given the following information, the firm's
receivables in January are …

1. R 700.
2. R2 300.
3. R2 500.
4. R6 100.

The information provided below applies to the next four questions.

Statement of financial position for Vryheid Investments Ltd (extracted)

Assets Equity & liabilities

Current assets R10 000 Current liabilities R5 000
Fixed assets R20 000 Long-term debt R12 000
Equity R13 000
Total R30 000 Total R30 000

The company earns 5% on current assets and 15% on fixed assets. The firm’s current liabilities
cost 7% to maintain and the average annual cost of long-term funds is 20%.

QUESTION 10

The firm’s initial annual profits on total assets are …

1. R2 500.
2. R3 000.
3. R3 500.
4. R4 500.

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QUESTION 11

If the firm was to shift R3 000 of current assets to fixed assets, the firm’s net working capital
would …, the annual profits on total assets would … and the risk of technical insolvency would
….

1. decrease; increase; increase.

2. increase; decrease; decrease.
3. decrease; increase; decrease.
4. increase; decrease; increase.

QUESTION 12

If the firm was to shift R7 000 of fixed assets to current assets, the firm’s net working capital
would …, the annual profits on total assets would … and the risk of not being able to meet
current obligations would ….

1. increase; decrease; decrease.

2. decrease; increase; increase.
3. decrease; increase; decrease.
4. increase; decrease; increase.

QUESTION 13

If the firm was to shift R2 000 of current liabilities to long-term funds, the firm’s net working
capital would …, the annual cost of financing would … and the risk of technical insolvency
would ….

1. decrease; decrease; increase.

2. increase; increase; decrease.
3. increase; decrease; decrease.
4. decrease; increase; decrease.

QUESTION 14

By offering credit to customers, the firm may …

1. decrease the cost of goods sold.

2. decrease its investment in accounts payable.
3. decrease its investment in accounts receivable.
4. increase the price of goods sold to cover its costs.

QUESTION 15

The Tustin Mining Company was extended credit terms of 4/15 net 30 EOM. The cost of giving
up the cash discount, assuming the firm was able to stretch its accounts payable to 60 days
without damaging its credit rating, would be approximately … (assume 365 days in a year).

1. 18.81%.
2. 25.09%.
3. 33.80%.
4. 75.26%.

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QUESTION 16

The type of loan issued to a business by a commercial bank in which the borrower only needs
additional funds for a short period and will not require such financing on a recurring or seasonal
basis is called a …

1. line of credit.
2. single payment note.
3. revolving credit agreement.
4. short-term self-liquidating loan.

QUESTION 17

The Shamim Mining Company borrowed R200 000 for one year under a line of credit with a
stated interest rate of 8.5% and a 15% compensating balance. Normally, the firm keeps a
balance of about R10 000 in its checking account. Based on this information, the effective
annual interest rate on the loan was …

1. 7.29%.
2. 7.89%.
3. 8.82%.
4. 9.44%.

Use the information provided below to answer questions 18, 19 and 20.

Pragmatic Mechanics Ltd has determined the following factors relative to its asset and financing
mix.

 The firm earns 10% annually on current assets

 The firm earns 20% annually on fixed assets
 The firm pays 13% annually on current liabilities
 The firm pays 17% annually on long-term funds

The firm’s current, fixed and total asset requirements for the last six months of the previous year
are summarised in the table below.

Month Current assets (R) Fixed assets (R) Total assets (R)
July 45 000 100 000 145 000
August 40 000 100 000 140 000
September 50 000 100 000 150 000
October 55 000 100 000 155 000
November 60 000 100 000 160 000
December 75 000 100 000 175 000

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 FIN3702/101/3/2019

QUESTION 18

The firm’s average seasonal funds requirement is approximately equal to …

1. R 14 167.
2. R 17 500.
3. R 85 000.
4. R140 000.

QUESTION 19

The firm’s financing costs for this period, according to the aggressive financing strategy, will
approximately be equal to …

1. R12 821.
2. R22 775.
3. R24 475.
4. R26 075.

QUESTION 20

The firm’s financing costs for this period, according to the conservative financing strategy, will
approximately be equal to …

1. R11 900.
2. R12 821.
3. R14 875.
4. R21 175.

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ASSIGNMENT 02 (compulsory)
20 MULTIPLE-CHOICE QUESTIONS (20 marks)
DUE DATE: 11 October 2019
UNIQUE NUMBER: 609997

AIM: The purpose of this assignment is to evaluate your knowledge of the fundamental
aspects of cash flow management, financial planning, working capital management and
the management of current assets and/or liabilities. To complete this assignment, you
must study chapters 3, 14 and 15 of your prescribed book and the relevant study units in
your study guide.

Answer the following questions and submit your assignment at https://my.unisa.ac.za.

QUESTION 1

A firm has annual operating outlays of R1 800 000 and a cash conversion cycle of 60 days. If
the firm currently pays 12% for negotiated financing and reduces its cash conversion cycle to 50
days, the annual savings are … (assume 360 days in a year)
1. R 6 000.
2. R 50 000.
3. R200 000.
4. R216 000.

QUESTION 2

A negative cash conversion cycle …

1. is easy for a manufacturing firm to attain.

2. means the average payment period exceeds the operating cycle.
3. means the operating cycle exceeds the average payment period.
4. indicates that the firm is shortening its average payment period and lengthening its
average collection period.

QUESTION 3

Makula Bakery is preparing its cash budget and expects to have sales of R30 000 in January,
R35 000 in February and R35 000 in March. If 20% of sales are in cash, 40% are credit sales
paid in the month after the sale, and another 40% are credit sales paid two months after the
sale, what are the expected credit receipts for March?

1. R24 057
2. R26 000
3. R29 700
4. R33 000

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QUESTION 4

Commercial banks lend unsecured short-term funds in which three of the following basic ways?

1. single-payment note, lines of credit, commercial paper

2. commercial paper, lines of credit, revolving credit agreements
3. single-payment note, lines of credit, revolving credit agreements
4. single-payment note, revolving credit agreements, commercial paper

The information provided below applies to the next three questions.

Cantankerous Ltd is considering whether to pursue an aggressive or conservative current asset

investment policy. The firm's annual sales are expected to total R3 600 000, its fixed assets
turnover ratio equals 4.0, and its debt and ordinary share equity are each 50% of total assets.
EBIT is R150 000, the interest rate on the firm's debt is 10% and the tax rate is 40%. If the
company follows an aggressive policy, its total asset turnover will be 2.5. Under a conservative
policy, its total asset turnover will be 2.2.

QUESTION 5

If the firm adopts an aggressive policy, how much lower will its interest expense be than under
the conservative policy?

1. R8 418
2. R8 861
3. R9 327
4. R9 818

QUESTION 6

What is the difference in the projected return on equities (ROEs) under the aggressive and
conservative policies?

1. 1.20%
2. 1.50%
3. 1.80%
4. 2.16%

QUESTION 7

Assume that the company believes that if it adopts an aggressive policy, its sales will fall by
15% and the EBIT by 10%. However, its total assets turnover, debt ratio, interest rate and tax
rate will all remain the same. In this situation, what will be the difference between the projected
ROEs under the aggressive and conservative policies?

1. 2.24%
2. 2.46%
3. 2.70%
4. 2.98%

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QUESTION 8

Which of the following would cause average inventory holdings to decrease, while other factors
remain constant?

1. fixed order costs double

2. the sales forecast is revised downward by 10%
3. the purchase price of inventory items decreases by 50%
4. the carrying cost of an item decreases (as a percentage of the purchase price)

The following information applies to the next two questions.

SN Bridal Ltd uses 1 400 000 metres of material each year. Furthermore, the firm orders the
material at a cost of R2 per metre, plus fixed ordering costs of R100 per order. The firm’s
carrying cost is 20% of the inventory value at cost. Assume a 365-day year for this company.

QUESTION 9

What is the approximate firm’s EOQ?

1. 13 563
2. 25 981
3. 26 458
4. 43 987

QUESTION 10

What is the firm’s minimum cost of ordering and holding inventory?

1. R10 392
2. R10 583
3. R11 560
4. R13 563

QUESTION 11

Nabanja Ltd’s cash conversion cycle is 87 days, the average age of accounts payable is 45
days and the average age of inventory is 72 days. Assume a 365-day year. If the annual sales
are R936 000, what is the firm's average accounts receivable balance?

1. R141 041
2. R143 000
3. R153 863
4. R212 112

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 FIN3702/101/3/2019

QUESTION 12
Busi borrowed R250 000 from the bank for one year at a stated annual interest rate of 15% and
with interest paid in advance. The bank requires her to maintain a compensating balance of
10% on the loan value. The effective annual interest rate on this loan will be …

1. 14.00%.
2. 18.42%.
3. 19.72%.
4. 20.00%.

QUESTION 13
A corporation borrowed R100 000 for six months from the bank at the prime rate plus 2%. At the
beginning of the loan, the prime rate was 8.5% but this changed to 9% after two months. This
was the only change. Approximately how much interest must this company pay for the period
(assume 365 days in a year)?

1. R3 616
2. R3 667
3. R5 342
4. R6 411

QUESTION 14

With other factors remaining constant, which one of the following will cause an increase in the
working capital of a business?

1. A cash dividend is declared and paid.

2. Cash is used to buy marketable securities.
3. Missing inventory is written off against retained earnings.
4. Merchandise is sold at a profit, but the sale is on credit.

QUESTION 15

The effective interest rate is generally …

1. lower if the loan is a discount loan.

2. higher if the loan is a discount loan.
3. higher on a loan if interest is paid at maturity.
4. unaffected by whether the loan is a discount loan or has interest paid at maturity.

QUESTION 16

Sinhle Beauty Products Ltd’s average collection period is 50 days (based on a 365-day year
cycle). The company’s accounts receivable is equal to R100 million and its balance sheet
shows an inventory level equal to R125 million. What is the company’s inventory turnover ratio?

1. 3.33
2. 4.25
3. 5.84
4. 7.25

29
QUESTION 17

Mutaga Grocers Ltd’s budgeted monthly sales are R3 000 000. Altogether 40% of its customers
pay in the first month and take the 2% discount. The remaining 60% pay in the following month
of sale and do not receive a discount. Mutaga Grocers Ltd’s bad debts are negligible and can
be ignored. Purchases are constant each month at R1 500 000. Other payments for wages, rent
and taxes are constant at R700 000 per month. Using a single month’s cash budget, what will
the cash gain/loss be during a typical month at this firm?

1. R728 000
2. R740 000
3. R756 000
4. R776 000

QUESTION 18

A firm has issued R2 million worth of commercial paper that has a 90-day maturity and sells for
R1 950 000. The approximate annual interest rate on the issue of commercial paper is …
(assume 365 days in a year).

1. 5%
2. 11%
3. 21%
4. 23%

QUESTION 19

The primary purpose of pro forma statements is …

1. profit planning.
2. credit analysis.
3. cash budgeting.
4. leverage analysis.

QUESTION 20

Khensani Ltd needs to raise more capital. The company purchases supplies on terms of 1/10
net 20, and it currently takes the discount. The one way of getting the much needed funds
would be to forgo this discount. The owner believes she could delay payment to 40 days without
any adverse effects. What is the effective annual percentage cost of funds raised by this
action? (assume a 365-day year)

1. 13.01%
2. 12.36%
3. 11.74%
4. 10.59%

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 FIN3702/101/3/2019

SELF- ASSESSMENT ASSIGNMENT 03 (NOT TO BE SUBMITTED)

THREE ESSAY-TYPE QUESTIONS
DUE DATE: NOT FOR SUBMISSION

AIM: The purpose of this assignment is to evaluate your knowledge of the fundamental
aspects of cash flow management, financial planning, working capital management and
the management of current assets. This is a self-evaluation assessment with questions
and solutions. You are advised to attempt the assignment and check your solutions
against those provided in this tutorial letter. Do not submit this assignment for marking.

QUESTION 1

The Calvary Company projects an increase in sales from R2 million to R3 million, but it needs
an additional R600 000 in current assets to support the expansion. The money can be obtained
from the bank at an interest rate of 14%, discounted interest, with no compensating balances
required. Alternatively, the Calvary Company can finance the expansion by no longer taking
discounts, hence increasing its accounts payable. The company purchases under the terms of
2/10 net 30, but it can delay payment by an additional 30 days past the due date without
incurring a penalty because of its suppliers’ excess capacity problems (assume 365 days in a
year).

REQUIRED

Based strictly on an interest rate comparison, how should the Calvary Company finance this
expansion?

SOLUTION

The question requires the student to compare and contrast the two interest rate scenarios
provided in the question and to recommend the best alternative to the company.

If the company borrows the money:

Effective interest rate for discounted loans

Interest R600 000 (0,14)

= = = 16.28%
(Borrowed amount - Interest) (R600 000 - R84 000)

Nominalrate 0,14
Alternatively, effective interest rate = = = 16.28%
(1 - Nominalrate) (1 - 0,14)

If the firm considers its credit terms:

CD 360
Cost of giving up a cash discount = x (chapter 15)
(100 - CD) N

2 360
= x = 14.69%
(100 - 2) (60 - 10)

Calculating the annualised (exact) cost (if discounts are continually given up):

31
 360/ N 360/ 50
 CD   2 
= 1   - 1(equation 15.1a) = 1   - 1 = 15.66%
 (100 - CD)   (100 - 2) 

Therefore, in comparing the interest costs, it becomes apparent that the Calvary Company
should extend its payables period rather than borrow from the bank. The rate under this
approach is comparatively lower.

QUESTION 2

Calculate the cost of giving up the cash discount under each of the following terms, assuming
360 days in a year.

(a) 1/15 net 20

(b) 2/10 net 60
(c) 3/10 net 30
(d) 2/10 net 45

SOLUTION

CD 360
The cost of giving up a cash discount = x
(100 - CD) N

1 360
(a) = x = 72.73%
(100 - 1) (20 - 15)

2 360
(b) = x = 14.69%
(100 - 2) (60 - 10)

3 360
(c) = x = 55.67%
(100 - 3) (30 - 10)

2 360
(d) = x = 20.99%
(100 - 2) (45 - 10)

QUESTION 3

ArchMittal Business Solutions Ltd has compiled several factors relative to its financing mix.
The firm pays 8% per annum on short-term funds and 10% per annum on long-term funds. The
firm’s monthly current, fixed and total assets requirements for the previous year are summarised
in table 1. Refer to the table to answer the following questions.

REQUIRED

Determine the following:

3.1 the monthly average permanent funds requirement

3.2 the monthly average seasonal funds requirement
3.3 the annual financing costs (aggressive strategy)
3.4 the annual financing costs (conservative strategy)

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 FIN3702/101/3/2019

Table 1
Month Current assets Fixed assets Total assets
January R125 000 R300 000 R425 000
February R130 000 R300 000 R430 000
March R135 000 R300 000 R435 000
April R150 000 R300 000 R450 000
May R150 000 R300 000 R450 000
June R125 000 R300 000 R425 000
July R115 000 R300 000 R415 000
August R120 000 R300 000 R420 000
September R115 000 R300 000 R415 000
October R100 000 R300 000 R400 000
November R110 000 R300 000 R410 000
December R115 000 R300 000 R415 000

SOLUTION (3.1 and 3.2)

Table 2
Month Current Fixed Total Permanent Seasonal
assets assets assets requirement requirement
January R125 000 R300 000 R425 000 R400 000 R25 000
February R130 000 R300 000 R430 000 R400 000 R30 000
March R135 000 R300 000 R435 000 R400 000 R35 000
April R150 000 R300 000 R450 000 R400 000 R50 000
May R150 000 R300 000 R450 000 R400 000 R50 000
June R125 000 R300 000 R425 000 R400 000 R25 000
July R115 000 R300 000 R415 000 R400 000 R15 000
August R120 000 R300 000 R420 000 R400 000 R20 000
September R115 000 R300 000 R415 000 R400 000 R15 000
October R100 000 R300 000 R400 000 R400 000 R0
November R110 000 R300 000 R410 000 R400 000 R10 000
December R115 000 R300 000 R415 000 R400 000 R15 000
Monthly R400 000 R290 000/12
average =
R24 167

The lowest value becomes the permanent funds requirement.

3.3 Annual financing cost (aggressive strategy)

Permanent funds (long-term debt) = R400 000 x 10% = R40 000

Seasonal funds (short-term debt) = R24 167 x 8% = R 1 934
Total financing costs = R41 934

3.4 Annual financing cost funds (conservative strategy) with only long-term funds

= R450 000 x 10% = R45 000%

33
8.7 Other assessment methods
This module does not have any assessment methods other than those mentioned in this tutorial
letter, which are the formative assessment (or assignments) and the summative assessment
(the final examination). Any types of assessment, where necessary, will be communicated to
you.

8.8 The examination

The provisional examination dates will be published on https://my.unisa.ac.za once they have
been confirmed.
The examination paper for FIN3702 will consist of two compulsory sections. Section A will
comprise 30 multiple-choice questions to be answered on a mark-reading sheet and counting
30 marks, while section B will comprise two essay-type questions counting 40 marks in total.
The entire examination will be marked out of 70 marks and count for 80% of the final mark.
Students are advised to cover all the learning outcomes for this module in order to prepare for
the examination. No scope will be provided for the examination and no equations are
provided in the examination paper.
A student must attain a mark of at least 40% in order to qualify for admission to the
supplementary examination. Details about the procedure and cost for the re-marking of
examination scripts can be found on myUnisa at https://my.unisa.ac.za.

9 FREQUENTLY ASKED QUESTIONS

All frequently asked questions (FAQs) related to academic and administrative matters pertaining
to this module are posted on myUnisa under the FAQs tab.

10 SOURCES CONSULTED
The main sources consulted in the preparation of this tutorial letter include your study guide and
the prescribed textbook, including the relevant test bank accompanying the prescribed textbook.

11 IN CLOSING
This tutorial letter provided you with the purpose and outcomes of the module. The contact
details of the lecturers have been provided, as well as module-related resources and student
support services. It is important that you now prepare a study plan for yourself and devote 120
hours to this module in order to achieve success in the examination. Details of your assessment
have been provided, including your assignments for the semester. Some FAQs have been
provided on myUnisa in order to save you a telephone call or an e-mail. Finally, we encourage
you to interact with fellow students on myUnisa discussion forums and to access the resources
we will provide during the course of the year. We trust the module, Working Capital
Management (FIN3702), will be of value to you and that you will find it interesting and
stimulating. We also hope that the knowledge you gain from it will be of practical value to your
working environment where applicable.
Best wishes
Your lecturers for FIN3702

THE DEPARTMENT OF FINANCE, RISK MANAGEMENT AND BANKING

©
Unisa 2018
34