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Calculate the net profit after tax and interest for the year 2025.

Business/Management

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  1. Calculate the net profit after tax and interest for the year 2025.

    The formula for net profit after tax and interest is:
    Net profit before tax and interest - Interest paid - Taxation

    From the income statement for Year 2025:
    Net profit before tax and interest = R40 000
    Interest paid = R1 900
    Taxation = R3 500

    Net profit after tax and interest (2025)=R40 000−R1 900−R3 500\text{Net profit after tax and interest (2025)} = \text{R}40\,000 - \text{R}1\,900 - \text{R}3\,500 Net profit after tax and interest (2025)=R34 600\text{Net profit after tax and interest (2025)} = \text{R}34\,600

    The net profit after tax and interest for 2025 is R34 600\boxed{\text{R}34\,600}.

  2. Calculate the net profit margin for 2025 for Naledi Dealers.

    The formula for net profit margin is:

    Net Profit Margin=Net profit after tax and interestSales×100%\text{Net Profit Margin} = \frac{\text{Net profit after tax and interest}}{\text{Sales}} \times 100\%

    From Step 1, Net profit after tax and interest for 2025 = R34 600.
    From the income statement for Year 2025, Sales = R170 000.

    Net Profit Margin (2025)=R34 600R170 000×100%\text{Net Profit Margin (2025)} = \frac{\text{R}34\,600}{\text{R}170\,000} \times 100\% Net Profit Margin (2025)=0.203529...×100%\text{Net Profit Margin (2025)} = 0.203529... \times 100\% Net Profit Margin (2025)≈20.35%\text{Net Profit Margin (2025)} \approx 20.35\%

    The net profit margin for 2025 is 20.35%\boxed{20.35\%}.

  3. Calculate the gross profit margin for 2024 for Naledi Dealers.

    The formula for gross profit margin is:

    Gross Profit Margin=Gross profitSales×100%\text{Gross Profit Margin} = \frac{\text{Gross profit}}{\text{Sales}} \times 100\%

    From the income statement for Year 2024:
    Gross profit = R65 000
    Sales = R150 000

    Gross Profit Margin (2024)=R65 000R150 000×100%\text{Gross Profit Margin (2024)} = \frac{\text{R}65\,000}{\text{R}150\,000} \times 100\% Gross Profit Margin (2024)=0.433333...×100%\text{Gross Profit Margin (2024)} = 0.433333... \times 100\% Gross Profit Margin (2024)≈43.33%\text{Gross Profit Margin (2024)} \approx 43.33\%

    The gross profit margin for 2024 is 43.33%\boxed{43.33\%}.

  4. Determine which year was more profitable for Naledi Dealers and give ONE reason.

    To compare profitability, we use the net profit after tax and interest for both years.
    From Step 1, Net profit after tax and interest for 2025 = R34 600.

    Now, calculate the net profit after tax and interest for 2024:
    From the income statement for Year 2024:
    Net profit before tax and interest = R30 000
    Interest paid = R1 300
    Taxation = R2 300

    Net profit after tax and interest (2024)=R30 000−R1 300−R2 300\text{Net profit after tax and interest (2024)} = \text{R}30\,000 - \text{R}1\,300 - \text{R}2\,300 Net profit after tax and interest (2024)=R26 400\text{Net profit after tax and interest (2024)} = \text{R}26\,400

    Comparing the net profits after tax and interest:
    Year 2024: R26 400
    Year 2025: R34 600

    Year 2025 was more profitable.
    Reason: The net profit after tax and interest for 2025 (R34 600) was higher than for 2024 (R26 400).

  5. Explain why it was important for Naledi Dealers to draw up an income statement.

    An income statement is crucial for Naledi Dealers to assess the financial performance of the business over a specific period. It shows whether the business made a profit or a loss, helping management to make informed decisions about operations, pricing, and cost control.

  6. Explain how Naledi will know if the business is making a loss.

    Naledi will know the business is making a loss if the total expenses exceed the total income (revenue) for the period. On the income statement, this would be indicated by a negative net profit figure.

  7. Calculate the total amount of expenses incurred by Naledi's business (Question 1.2).

    Identify all expense items from the provided list:

    • Bank charges: R250
    • Interest on loan: R12 000
    • Advertising: R2 500
    • Cost of sales: R128 000
    • Fuel: R15 000
    • Water and electricity: R2 200

    Sum the expenses:

    Total Expenses=R250+R12 000+R2 500+R128 000+R15 000+R2 200\text{Total Expenses} = \text{R}250 + \text{R}12\,000 + \text{R}2\,500 + \text{R}128\,000 + \text{R}15\,000 + \text{R}2\,200 Total Expenses=R169 950\text{Total Expenses} = \text{R}169\,950

    The total amount of expenses incurred by Naledi's business is R169 950\boxed{\text{R}169\,950}.

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