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Questions and Answers
What is the total projected sales for Dreamit Electronics Ltd in 2024?
How much is expected to be spent on dividends by Dreamit Electronics Ltd for the year 2024?
What is the total amount owed to Mesa Bank at the end of 2023?
What is the calculated increase in cash expected for Dreamit Electronics Ltd during 2024?
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If the gross margin is projected at 25%, what would the gross profit be for sales of R40,000,000?
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What is the expected cost of the new machine that Dreamit Electronics Ltd is considering for 2025?
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What would be the total forecasted depreciation expense for Dreamit Electronics Ltd in 2024?
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What is the expected net profit margin for Dreamit Electronics Ltd in 2024?
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Study Notes
Company Overview
- Dreamit Electronics Ltd celebrated its 10th anniversary in 2023.
- The company aims to lead the South African electronics industry through growth and innovation.
- Committed to fulfilling economic and social responsibilities as a good corporate citizen.
Financial Position on 31 December 2023
- Fixed assets valued at R30,000,000.
- Current assets include:
- Inventory: R9,400,000
- Accounts receivable: R8,000,000
- Cash: R1,600,000
- Equity comprises:
- Ordinary share capital: R17,000,000
- Retained earnings: R6,400,000
- Liabilities include:
- Long-term loan to Mesa Bank: R22,000,000
- Trade creditors: R3,600,000
Projections for 2024
- Anticipated sales increase from R30,000,000 in 2023 to R40,000,000 in 2024.
- All sales conducted on credit, with an accounts receivable collection period of 36.5 days.
- Expected gross margin of 25% and net profit margin of 10%.
- Total inventory purchases projected at R25,000,000, also on credit.
- Estimated cash increase of R500,000 within 2024.
- Planned expenditure of R24,000,000 on land and buildings in Q4 2024.
- Forecasted total depreciation for 2024: R4,000,000.
- Issuance of 1,000,000 ordinary shares at R4 each scheduled for January 2024.
- Dividends of R3,000,000 anticipated to be recommended at the end of 2024, paid in 2025.
- R5,500,000 payment to Mesa Bank planned for 2024, including R2,000,000 interest on the loan.
- Calculation of required external funding (non-current debt) necessary.
Investment Opportunity for 2025
- Proposal to acquire a new machine costing R4,000,000 at the beginning of 2025.
- The machine will have a useful life of five years with no anticipated scrap value.
- Expected annual profits from the machine:
- Year 1: R600,000
- Year 2: R620,000
- Year 3: R700,000
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Description
Explore the ambitious projections of Dreamit Electronics Ltd for 2024 and 2025. As the company celebrates its 10th anniversary, it aims to improve its growth, innovation, and social responsibility in the electronics industry. Test your knowledge on their financial standings and strategic goals.
