Reference no: EM132555984
Question 1: Explain what a residual dividend policy is.
1.1 Blippi Ltd follows a strict residual dividend policy. Their debt equity ratio is 2:1.
Question 2: If their profits are R280 000 for the current year, what is the maximum amount of capital spending possible with no new equity?
2.2. If planned investment outlays for the current year are R850 000, will Blippi be able to pay a dividend?
2.3 Does Blippi Ltd maintain a constant dividend payout? Explain.
Question 3: Explain if retained earnings are a free source of finance for the business.
Question 4: Explain the meaning of the term "economic order quantity" and explain the significance of calculating this value.
Question 5: State any two (2) assumptions of the EOQ model.
Question 6: Spares for you sells spares for the motor and taxi industry. The company runs a mail-order business for taxi headlights. Annual demand for the headlights is 8 000 units. The annual holding cost per unit is R300 and the cost to place an order is R80. Calculate the EOQ