# Question one

1.1Profit margin = Earnings/Sales x 100
But Sales have not been given; as such we need to calculate sales from:
Collection period = Account Receivables/Sales x 365 = 14.2 days
Sales = 84 000 x 365/14.2
Sales = 30660000/14.2 = R2159154.93

Therefore, Profit margin =73500/2159154.93 x 100 = 3.4%

1.2Total asset turnover = sales/operation
2159154.93/560000 = 3.86 times

1.3Return on Owners’ Equity = Earning/ Total Assets x Total Assets/Equity x 100
ROE = earnings/equity x 100

The other formula to calculate ROE = Profit margin x Total Assets Turnover x
Equity Multiplier

Where equity multiplier is 1 + debt/equity ratio

Debt/Equity ratio = 0.65

That means 1 + 0.65 = 1.65

Therefore ROE = 3.4 x 3.86 x 1.65 = 21.66%

1.4Provide the explanation I gave in class

4 x 100 = 20% .15 – 0.90 0.12 = R2.1 0.5/0.90/4.64 Years Dividend Capital Gain yield P1 .Question two Shares Returns Growth Dividend Yield Capital gain yield P = D/R .225/4.48) = R8.30/4.90/4.2 x 5.5/0.5 x 100 30 cents 7% 4.5 = R5.g A 15% B 15% C 15% 10% 0% -5% 4.Po 1 5.08 1.4 Yr 2 (100 + 20) % = 1.16 For year three it will be R (2.5 cents 5% D 15% Share D Yr 1 (100 + 20) % = 1.15 – 0.4 = 1.5/0.5 x 100 90cents 20% 4.15 – 0 0.08/5.2 x 4.5 x 100 = 20% 2 6.5 = 0.48 Yr 3 – g] Since there is a constant growth of 12% we use formula [D/R 6.16 + 6.5) 0.48/0.4 = R6.5 x 100 22.15 – (.4 – 4.48 – 5.

3Discuss as in class 8.3 2.48 x 100 = 33% .64 – 6.16/6.48 = 2.16 2.