Economics Answers

using appropriate diagram, show the concepts of ceiling price and floor price . 10marks

1. With help of a diagram, explain the impact of decrease in 1 product only. Please provide example (products etc as assumptions) to explain the impact.

2. By providing an example and with the help of a diagram, explain the impact of start allowing free labor migration between 2 countries.

2014

2015

2.1.1  Gross Profit Margin (Gross profit percentage)

Gross profit margin = (Total

(3000000-2250000) x 100

       3000000             1

Sales-cost of sales) x 100

           Total Sales     1

(4000000-3000000) x 100

 4000000                   1

=25%

= 25%

2.1.2  Net Profit Percentage

  Net income/net profit

Net income x 100

112 000/350 000*100/1

112 000/ 390 000

=32%

=29%

2.1.3  Working Capital (Current) Ratio

Current assets/current liabilities

Current assets/current liabilities

550 000/250 000

530 000/ 430 000

=2.2%

=1.2

2.1.4  Debt to Equity Ratio

Total assets/shareholders’ equity

Total assets/shareholders’ equity

1350 000/ 850 0000

1710 000/950 000

=1.58

=1.8

2.1.5  Rate of return on Total Capital (after tax)

Net income+ equity

Net income+ equity-dividends

112 000-5000/ 850 000

112 000+950 000=1062 000

12.

=12.58

12.1

2.1.6    Yield on Shareholder’s Interest

1 EXPLAIN your bank’s policy on corporate clients – what do you need to consider when determining who is a desirable corporate client and who is not?   ASSESS the profitability, liquidity, solvency and financial structure of ABC Limited for the two years by CALCULATING the following financial ratios for each year: 

2014

2015

Yield on Shareholder’s Interest

 DISCUSS how ABC Limited could have improved their profitability in the less profitable year and PROVIDE recommendations to management on how ABC could be more profitable in the future.

 COMPILE a written report on the information that you have gathered in assignment question 2.1, as well as your analytical procedures, comparison and interpretation of the Annual Financial Statements of ABC Limited, for the past two years. Include the following in your report:

Graphs, diagrams and tables, where appropriate

Do we need cashless transactions. What are the modes of cashless transactions

Conversion cost formula and examples

The inverse of the demand and supply functions for shoes is given by the

following equations respectively:

Demand: P = 1400 - 2Qd

Supply: P = 200 + 1Qs

1.1. Calculate the equilibrium price and quantity of shoes.

(5)

1.2. Assume that the price of shoes is R700. Use your answer in 1.1 to explain

the resulting situation in the market for shoes, and how equilibrium will

be restored without government intervention, ceteris paribus

Bank

Receipts from debtor 290,200 Balance b/d 104,500

Commission 87,300 Loan 98,000

Bank interest 16,000 Payments to supplier 111,600

Cash sales 317,600 Equipment 442,000

Fixtures 377,400 Utilities 11,200

Drawings 66,700

Wages 55,000

Cash purchases 72,100

Rent 19,600

Rate 22,500

Balance c/d 85,300

1,088,500 1,088,500

List of balance:

Details May 1 Apr 30

Stock 34,000 12,500

Loan 196,000 98,000

Land 811,000 811,000

Fixtures 740,000 314,000

Equipment 0 433,000

Creditor 44,700 68,500

Debtor 92,300 52,300

Rate prepaid 10,100 8,400

Commission prepaid 12,400 19,600

Wage owing 17,400 18,200

Additional notes:

1. Stock taken for personal use amount 16,200.

2. Amounts written-off as bad debts total 8,700.

3. Discount received from credit suppliers & discounts given to debtor amount to

14,800 & 11,100.

4. Return inward total 22,000.

5. A set-off of 3,600 was applied to the sale & purchase ledger.

6. The sale of fixtures was at net book value.

REQUIRED:

Derive the control account & trial balance.

What is expansionary monetary policy

5Q^2+8Q+20

Find the

Total fix cost

Fixed cost

Marginal cost

Variable cost

Is the firm with the above cost function in the short-run or long-run