ICT2641: Income Statement Please make sure that you have printed the necessary documents for this presentation! You have to work through the Balance Sheet Presentation first!

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Owner’s equity R 3 400 000 Sales-in-Cash Banked 4 200 000 Long-term loans R 900 000 @ 15% interest Current liabilities (creditors plus overdraft) R4 000 000 Fixed assets (land, buildings, plant and equipment) R2 500 000 Current assets (stock plus debtors) R 5 800 000 Annual sales R 4 200 000 Cost of sales R 2 400 000 Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Owner’s equity R 3 400 000 Sales-in-Cash Banked 4 200 000 Long-term loans R 900 000 @ 15% interest The Queue: 1. “Ready-for-Sale” costs (COGS) (2 400 000) Current liabilities (creditors plus overdraft) R4 000 000 Fixed assets (land, buildings, plant and equipment) R2 500 000 Current assets (stock plus debtors) R 5 800 000 Annual sales R 4 200 000 Cost of sales R 2 400 000 Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 Gross profit is the Sales-in-Cash Banked (R4 200 000) minus the Cost of Sales (R2 400 000) which is equal to R1 800 000 Fixed assets (land, buildings, plant and equipment) R2 500 000 Current assets (stock plus debtors) R 5 800 000 Annual sales R 4 200 000 Cost of sales R 2 400 000 Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 OPEX must be deducted from the Gross profit. This will in turn give you the Earnings before Interest and Tax (EBIT) Current assets (stock plus debtors) R 5 800 000 Annual sales R 4 200 000 Cost of sales R 2 400 000 Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 Annual sales R 4 200 000 Cost of sales R 2 400 000 Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 3. Lenders (135 000) Annual sales R 4 200 000 The company needs to repay the loan from the bank. The original loan amount is R900 000 at an interest rate of 15%. Therefore the calculation is as follows: R900 000 X 15 divided by 100 will give an amount of R135 000. Cost of sales R 2 400 000 Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 3. Lenders (135 000) Annual sales R 4 200 000 Profit before tax (PBT) = 965 000 Cost of sales R 2 400 000 Deduct the loan repayment of R135 000 from the EBIT to provide you with the profit before tax (PBT) of R965 000. Operating expenses R 700 000 Tax rate 35% Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 3. Lenders (135 000) Annual sales R 4 200 000 Profit before tax (PBT) = 965 000 Cost of sales R 2 400 000 4. Taxman (337 750) Operating expenses R 700 000 Tax rate 35% The contribution to SARS will be based on the PBT. The current tax rate is 35%, therefore the calculation will be R965 000 X 35 divided by 100 = R337 750. Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 3. Lenders (135 000) Annual sales R 4 200 000 Profit before tax (PBT) = 965 000 Cost of sales R 2 400 000 4. Taxman (337 750) Operating expenses R 700 000 Profit after tax (PAT) = 627 250 Tax rate 35% The taxman’s contribution (R337 750) is deducted from the PBT (R965 000) to give you the profit after Tax (PAT) of R627 250 Owner’s expected return on his investment 40%

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 3. Lenders (135 000) Annual sales R 4 200 000 Profit before tax (PBT) = 965 000 Cost of sales R 2 400 000 4. Taxman (337 750) Operating expenses R 700 000 Profit after tax (PAT) = 627 250 Tax rate 35% 5. Owner’s expected return (1 360 000) Owner’s expected return on his investment 40% The owner’s expected return on his original Investment of R3 400 000 is 40%, therefore it is calculated as follows: R3 400 000 X 40 divided by 100 = R1 360 000

The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers: Income Statement based on data provided on the left as well as on the Balance Sheet Sales-in-Cash Banked 4 200 000 Owner’s equity R 3 400 000 The Queue: Long-term loans R 900 000 @ 15% interest 1. “Ready-for-Sale” costs (COGS) (2 400 000) Gross Profit = 1 800 000 Current liabilities (creditors plus overdraft) R4 000 000 2. Wages, Salaries & Services (OPEX) (700 000) Fixed assets (land, buildings, plant and equipment) R2 500 000 Earnings before interest & tax (EBIT) = 1 100 000 Current assets (stock plus debtors) R 5 800 000 3. Lenders (135 000) Annual sales R 4 200 000 Profit before tax (PBT) = 965 000 Cost of sales R 2 400 000 4. Taxman (337 750) Operating expenses R 700 000 Profit after tax (PAT) = 627 250 Tax rate 35% 5. Owner’s expected return (1 360 000) Owner’s expected return on his investment 40% Wealth created/(destroyed) (732 750)

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