# Accounting Paper 1, November 2024, question 3.4.2

> The directors of Mkhize Traders Ltd bought extra equipment during 2024 and... Marked mark by mark. Q3.4.2, Accounting Paper 1 November 2024, 6 marks.

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Last updated: 2026-11-12

Subject: Accounting. Source: Based on Nov 2024 · Paper 1 · Q3.4.2. Marks: 6. Not yet checked by a teacher.

## Question 3.4.2 (6 marks)

Indicators for the company:
Debt/equity ratio: 2023: 0,6 : 1; 2024: 0,3 : 1
Return on average capital employed (ROTCE): 2023: 14%; 2024: 22%
Interest rate on the loan: 11%

The directors of Mkhize Traders Ltd bought extra equipment during 2024 and paid for part of it with a new loan. Using the information provided, explain how this decision changed the company’s financial risk and its gearing. Support your answer with TWO different indicators, and quote the figures for each.

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[Answer this question](https://sharpkop.co.za/accounting/2024-nov-p1/q3-4-2/) and see it marked mark by mark, with the reason for every lost mark.

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