MAC2602 Oct/Nov 2025 exam paper — questions

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  1. Question 1.1 · Analysis of financial information · 14 marks

    Clicks Group Limited ("CLICKS") is a South African-based healthcare retail group listed in the Personal Care, Drug and Grocery Stores sector on the Johannesburg Stock Exchange. The group operates almost a thousand stores, 65 of which are located in the neighbouring countries of Namibia, Botswana, Eswatini and Lesotho, where the political and economic climate has been unpredictable recently. In South Africa itself, both inflation and the Repo rate have been falling since 2023 but remain high, continuing to put pressure on companies and households alike. CLICKS has also been hit with several lawsuits alleging non-compliance with healthcare and pharmaceutical regulations, triggered by social media complaints about the quality of some of its in-house brand products (sold mainly in Namibia). Internally, certain stores have experienced inventory shortages caused by errors in the inventory forecasting system. CLICKS has a 31 August year-end. You are given the following extracts from its financial statements for the year ended 31 August 2025, with 2024 comparatives (all amounts in R million unless stated otherwise): Statement of profit or loss extract: Revenue 48 000 (2024: 44 000); Cost of sales 34 000 (32 000); Gross profit 14 000 (12 000); Employee costs 4 900 (4 300); Other operating costs 4 500 (4 000); Operating profit 4 600 (3 700); Other income 50 (50); Earnings before interest and tax (EBIT) 4 650 (3 750); Interest expense 350 (250); Profit before tax 4 300 (3 500). Statement of financial position extract: Property, plant and equipment 5 300 (5 600); Other non-current assets 2 600 (1 600); Total non-current assets 7 900 (7 200); Inventories 7 000 (6 300); Trade and other receivables 3 100 (2 800); Cash and cash equivalents 2 700 (2 400); Total current assets 12 800 (11 500); Total assets 20 700 (18 700). Share capital 1 100 (1 100); Retained earnings 5 200 (5 000); Total equity 6 300 (6 100); Long-term borrowings 2 500 (2 200); Deferred tax 400 (250); Total non-current liabilities 2 900 (2 450); Trade payables 10 000 (9 000); Current tax payable 250 (150); Short-term borrowings 1 250 (1 000); Total current liabilities 11 500 (10 150); Total equity and liabilities 20 700 (18 700). Additional information: (1) During the current financial year, the Southern African community embraced a healthier lifestyle, which positively impacted CLICKS' sales. (2) Although long-term borrowings increased during the year, which raised interest expense, CLICKS did benefit from the reduced repo rate during the 2025 financial year. (3) The company agreed to higher-than-expected salary increases with the labour unions, which negatively affected its profit margins. (4) The prevailing company tax rate is 27%. Taxation expense for the year ended 31 August 2025 was R1 000 million (2024: R900 million). (5) CLICKS has 600 million authorised shares, of which 240 million were issued at an average price of R4,60 per share. The market price per share as at 31 August 2025 was R40 (2024: R37). The dividend paid for the financial year ended 31 August 2025 was R7 (2024: R6). For Part A you must ignore the information given in Parts B, C and D of this question. Based only on the scenario information given about CLICKS, identify seven distinct risks the group is exposed to, and briefly discuss each one.Show the full question

  2. Question 1.2(i) · Analysis of financial information · 4 marks

    Clicks Group Limited ("CLICKS") is a South African-based healthcare retail group listed in the Personal Care, Drug and Grocery Stores sector on the Johannesburg Stock Exchange. The group operates almost a thousand stores, 65 of which are located in the neighbouring countries of Namibia, Botswana, Eswatini and Lesotho, where the political and economic climate has been unpredictable recently. In South Africa itself, both inflation and the Repo rate have been falling since 2023 but remain high, continuing to put pressure on companies and households alike. CLICKS has also been hit with several lawsuits alleging non-compliance with healthcare and pharmaceutical regulations, triggered by social media complaints about the quality of some of its in-house brand products (sold mainly in Namibia). Internally, certain stores have experienced inventory shortages caused by errors in the inventory forecasting system. CLICKS has a 31 August year-end. You are given the following extracts from its financial statements for the year ended 31 August 2025, with 2024 comparatives (all amounts in R million unless stated otherwise): Statement of profit or loss extract: Revenue 48 000 (2024: 44 000); Cost of sales 34 000 (32 000); Gross profit 14 000 (12 000); Employee costs 4 900 (4 300); Other operating costs 4 500 (4 000); Operating profit 4 600 (3 700); Other income 50 (50); Earnings before interest and tax (EBIT) 4 650 (3 750); Interest expense 350 (250); Profit before tax 4 300 (3 500). Statement of financial position extract: Property, plant and equipment 5 300 (5 600); Other non-current assets 2 600 (1 600); Total non-current assets 7 900 (7 200); Inventories 7 000 (6 300); Trade and other receivables 3 100 (2 800); Cash and cash equivalents 2 700 (2 400); Total current assets 12 800 (11 500); Total assets 20 700 (18 700). Share capital 1 100 (1 100); Retained earnings 5 200 (5 000); Total equity 6 300 (6 100); Long-term borrowings 2 500 (2 200); Deferred tax 400 (250); Total non-current liabilities 2 900 (2 450); Trade payables 10 000 (9 000); Current tax payable 250 (150); Short-term borrowings 1 250 (1 000); Total current liabilities 11 500 (10 150); Total equity and liabilities 20 700 (18 700). Additional information: (1) During the current financial year, the Southern African community embraced a healthier lifestyle, which positively impacted CLICKS' sales. (2) Although long-term borrowings increased during the year, which raised interest expense, CLICKS did benefit from the reduced repo rate during the 2025 financial year. (3) The company agreed to higher-than-expected salary increases with the labour unions, which negatively affected its profit margins. (4) The prevailing company tax rate is 27%. Taxation expense for the year ended 31 August 2025 was R1 000 million (2024: R900 million). (5) CLICKS has 600 million authorised shares, of which 240 million were issued at an average price of R4,60 per share. The market price per share as at 31 August 2025 was R40 (2024: R37). The dividend paid for the financial year ended 31 August 2025 was R7 (2024: R6). For Part A you must ignore the information given in Parts B, C and D of this question. Calculate the operating profit margin of CLICKS for both the financial years ended 31 August 2024 and 31 August 2025, presenting your workings in R millions (for example, express 2025 Inventories as R7 000m). Show all detailed calculations (2 marks), state whether the ratio improved or deteriorated from 2024 to 2025 (1 mark), and give one relevant possible reason for this change with reference to the scenario and financial information (1 mark).Show the full question

  3. Question 1.2(ii) · Analysis of financial information · 4 marks

    Clicks Group Limited ("CLICKS") is a South African-based healthcare retail group listed in the Personal Care, Drug and Grocery Stores sector on the Johannesburg Stock Exchange. The group operates almost a thousand stores, 65 of which are located in the neighbouring countries of Namibia, Botswana, Eswatini and Lesotho, where the political and economic climate has been unpredictable recently. In South Africa itself, both inflation and the Repo rate have been falling since 2023 but remain high, continuing to put pressure on companies and households alike. CLICKS has also been hit with several lawsuits alleging non-compliance with healthcare and pharmaceutical regulations, triggered by social media complaints about the quality of some of its in-house brand products (sold mainly in Namibia). Internally, certain stores have experienced inventory shortages caused by errors in the inventory forecasting system. CLICKS has a 31 August year-end. You are given the following extracts from its financial statements for the year ended 31 August 2025, with 2024 comparatives (all amounts in R million unless stated otherwise): Statement of profit or loss extract: Revenue 48 000 (2024: 44 000); Cost of sales 34 000 (32 000); Gross profit 14 000 (12 000); Employee costs 4 900 (4 300); Other operating costs 4 500 (4 000); Operating profit 4 600 (3 700); Other income 50 (50); Earnings before interest and tax (EBIT) 4 650 (3 750); Interest expense 350 (250); Profit before tax 4 300 (3 500). Statement of financial position extract: Property, plant and equipment 5 300 (5 600); Other non-current assets 2 600 (1 600); Total non-current assets 7 900 (7 200); Inventories 7 000 (6 300); Trade and other receivables 3 100 (2 800); Cash and cash equivalents 2 700 (2 400); Total current assets 12 800 (11 500); Total assets 20 700 (18 700). Share capital 1 100 (1 100); Retained earnings 5 200 (5 000); Total equity 6 300 (6 100); Long-term borrowings 2 500 (2 200); Deferred tax 400 (250); Total non-current liabilities 2 900 (2 450); Trade payables 10 000 (9 000); Current tax payable 250 (150); Short-term borrowings 1 250 (1 000); Total current liabilities 11 500 (10 150); Total equity and liabilities 20 700 (18 700). Additional information: (1) During the current financial year, the Southern African community embraced a healthier lifestyle, which positively impacted CLICKS' sales. (2) Although long-term borrowings increased during the year, which raised interest expense, CLICKS did benefit from the reduced repo rate during the 2025 financial year. (3) The company agreed to higher-than-expected salary increases with the labour unions, which negatively affected its profit margins. (4) The prevailing company tax rate is 27%. Taxation expense for the year ended 31 August 2025 was R1 000 million (2024: R900 million). (5) CLICKS has 600 million authorised shares, of which 240 million were issued at an average price of R4,60 per share. The market price per share as at 31 August 2025 was R40 (2024: R37). The dividend paid for the financial year ended 31 August 2025 was R7 (2024: R6). For Part A you must ignore the information given in Parts B, C and D of this question. Calculate the interest cover ratio of CLICKS for both the financial years ended 31 August 2024 and 31 August 2025, presenting your workings in R millions. Show all detailed calculations (2 marks), state whether the ratio improved or deteriorated from 2024 to 2025 (1 mark), and give one relevant possible reason for this change with reference to the scenario and financial information (1 mark).Show the full question

  4. Question 1.2(iii) · Analysis of financial information · 4 marks

    Clicks Group Limited ("CLICKS") is a South African-based healthcare retail group listed in the Personal Care, Drug and Grocery Stores sector on the Johannesburg Stock Exchange. The group operates almost a thousand stores, 65 of which are located in the neighbouring countries of Namibia, Botswana, Eswatini and Lesotho, where the political and economic climate has been unpredictable recently. In South Africa itself, both inflation and the Repo rate have been falling since 2023 but remain high, continuing to put pressure on companies and households alike. CLICKS has also been hit with several lawsuits alleging non-compliance with healthcare and pharmaceutical regulations, triggered by social media complaints about the quality of some of its in-house brand products (sold mainly in Namibia). Internally, certain stores have experienced inventory shortages caused by errors in the inventory forecasting system. CLICKS has a 31 August year-end. You are given the following extracts from its financial statements for the year ended 31 August 2025, with 2024 comparatives (all amounts in R million unless stated otherwise): Statement of profit or loss extract: Revenue 48 000 (2024: 44 000); Cost of sales 34 000 (32 000); Gross profit 14 000 (12 000); Employee costs 4 900 (4 300); Other operating costs 4 500 (4 000); Operating profit 4 600 (3 700); Other income 50 (50); Earnings before interest and tax (EBIT) 4 650 (3 750); Interest expense 350 (250); Profit before tax 4 300 (3 500). Statement of financial position extract: Property, plant and equipment 5 300 (5 600); Other non-current assets 2 600 (1 600); Total non-current assets 7 900 (7 200); Inventories 7 000 (6 300); Trade and other receivables 3 100 (2 800); Cash and cash equivalents 2 700 (2 400); Total current assets 12 800 (11 500); Total assets 20 700 (18 700). Share capital 1 100 (1 100); Retained earnings 5 200 (5 000); Total equity 6 300 (6 100); Long-term borrowings 2 500 (2 200); Deferred tax 400 (250); Total non-current liabilities 2 900 (2 450); Trade payables 10 000 (9 000); Current tax payable 250 (150); Short-term borrowings 1 250 (1 000); Total current liabilities 11 500 (10 150); Total equity and liabilities 20 700 (18 700). Additional information: (1) During the current financial year, the Southern African community embraced a healthier lifestyle, which positively impacted CLICKS' sales. (2) Although long-term borrowings increased during the year, which raised interest expense, CLICKS did benefit from the reduced repo rate during the 2025 financial year. (3) The company agreed to higher-than-expected salary increases with the labour unions, which negatively affected its profit margins. (4) The prevailing company tax rate is 27%. Taxation expense for the year ended 31 August 2025 was R1 000 million (2024: R900 million). (5) CLICKS has 600 million authorised shares, of which 240 million were issued at an average price of R4,60 per share. The market price per share as at 31 August 2025 was R40 (2024: R37). The dividend paid for the financial year ended 31 August 2025 was R7 (2024: R6). For Part A you must ignore the information given in Parts B, C and D of this question. Calculate the return on equity of CLICKS for both the financial years ended 31 August 2024 and 31 August 2025, presenting your workings in R millions. Show all detailed calculations (2 marks), state whether the ratio improved or deteriorated from 2024 to 2025 (1 mark), and give one relevant possible reason for this change with reference to the scenario and financial information (1 mark).Show the full question

  5. Question 1.2(iv) · Analysis of financial information · 4 marks

    Clicks Group Limited ("CLICKS") is a South African-based healthcare retail group listed in the Personal Care, Drug and Grocery Stores sector on the Johannesburg Stock Exchange. The group operates almost a thousand stores, 65 of which are located in the neighbouring countries of Namibia, Botswana, Eswatini and Lesotho, where the political and economic climate has been unpredictable recently. In South Africa itself, both inflation and the Repo rate have been falling since 2023 but remain high, continuing to put pressure on companies and households alike. CLICKS has also been hit with several lawsuits alleging non-compliance with healthcare and pharmaceutical regulations, triggered by social media complaints about the quality of some of its in-house brand products (sold mainly in Namibia). Internally, certain stores have experienced inventory shortages caused by errors in the inventory forecasting system. CLICKS has a 31 August year-end. You are given the following extracts from its financial statements for the year ended 31 August 2025, with 2024 comparatives (all amounts in R million unless stated otherwise): Statement of profit or loss extract: Revenue 48 000 (2024: 44 000); Cost of sales 34 000 (32 000); Gross profit 14 000 (12 000); Employee costs 4 900 (4 300); Other operating costs 4 500 (4 000); Operating profit 4 600 (3 700); Other income 50 (50); Earnings before interest and tax (EBIT) 4 650 (3 750); Interest expense 350 (250); Profit before tax 4 300 (3 500). Statement of financial position extract: Property, plant and equipment 5 300 (5 600); Other non-current assets 2 600 (1 600); Total non-current assets 7 900 (7 200); Inventories 7 000 (6 300); Trade and other receivables 3 100 (2 800); Cash and cash equivalents 2 700 (2 400); Total current assets 12 800 (11 500); Total assets 20 700 (18 700). Share capital 1 100 (1 100); Retained earnings 5 200 (5 000); Total equity 6 300 (6 100); Long-term borrowings 2 500 (2 200); Deferred tax 400 (250); Total non-current liabilities 2 900 (2 450); Trade payables 10 000 (9 000); Current tax payable 250 (150); Short-term borrowings 1 250 (1 000); Total current liabilities 11 500 (10 150); Total equity and liabilities 20 700 (18 700). Additional information: (1) During the current financial year, the Southern African community embraced a healthier lifestyle, which positively impacted CLICKS' sales. (2) Although long-term borrowings increased during the year, which raised interest expense, CLICKS did benefit from the reduced repo rate during the 2025 financial year. (3) The company agreed to higher-than-expected salary increases with the labour unions, which negatively affected its profit margins. (4) The prevailing company tax rate is 27%. Taxation expense for the year ended 31 August 2025 was R1 000 million (2024: R900 million). (5) CLICKS has 600 million authorised shares, of which 240 million were issued at an average price of R4,60 per share. The market price per share as at 31 August 2025 was R40 (2024: R37). The dividend paid for the financial year ended 31 August 2025 was R7 (2024: R6). For Part A you must ignore the information given in Parts B, C and D of this question. Calculate the cash ratio of CLICKS for both the financial years ended 31 August 2024 and 31 August 2025, presenting your workings in R millions. Show all detailed calculations (2 marks), state whether the ratio improved or deteriorated from 2024 to 2025 (1 mark), and give one relevant possible reason for this change with reference to the scenario and financial information (1 mark).Show the full question

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