Faculty of Accounting and Informatics

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An assessment of management skills on capital budgeting planning and practices : evidence from the small and medium enterprise sector
(Informa UK Limited, 2022-12-31) Nunden, Naresh; Abbana, Sharanam Sharma; Marimuthu, Ferina; Sentoo, Naresh
Budgets are a compass and guiding light for businesses. Therefore, management and owners of small and medium enterprises (SMEs) must carry out suitable and precise capital budgeting activities and methods to ensure business longevity and progression. There is a high risk of SMEs failing soon after they are found, with one likely cause being poor management skills. Thus, the study aims to assess the management skills of the capital budgeting planning and practices of SMEs. The objective is to ascertain the influence of management skills and owners on current capital budgeting planning and practice. The study adopted the quantitative method by administering questionnaires to 108 owners and managers in the Springfield Industrial Park. The findings of the study indicate that owners and managers were solely responsible for decision-making. Secondly, owners and managers lacked the financial skills, ability to control and lead staff. The study was limited to owners and managers in the SMEs and therefore cannot be inferred to any other area or subject/s. Future studies can be conducted in other regions, of which a comparative study is recommended that owners and managers in SMEs improve their business knowledge, as well as upskilling their financial ability in the capital budgeting process. Thus, the implications of improving owners and manager’s business knowledge will lead to timeous, smarter, and informed decision-making. It is therefore recommended that owners and managers take up short courses to improve computer literacy and financial skills in business processes.
A financial simulation for investment appraisal in solar panels at fast-food chains : a case study of McDonalds, South Africa
(2022-04-10) Abbana, Sharanam Sharma; Marimuthu, Ferina; Maama, Haruna
The sun is a significant source of inexhaustible free energy with the least adverse impact on the atmosphere. In order to overcome the adverse environmental effects and other issues connected with fossil fuels combustion, many nations have been compelled to investigate and develop environmentally-friendly options that are renewable in order to keep up with the growing demand for energy. This study was motivated by South Africa’s current electrical energy crisis and frequent load-shedding situations. Despite a global push towards renewable energy, South Africa presently relies on coal-fired power plants for more than 90% of its electrical energy. Currently, above-inflationary electrical energy tariffs are expected to increase. One of the renewable energy sources available is solar photovoltaic (PV) energy. The aim of this study was to financially simulate and appraise solar energy investment for McDonalds, an intensive fast-food restaurant energy consumer, to assess the feasibility of the investment. This study was quantitative in nature that simulated a census of 125 McDonalds DriveThru restaurants across South Africa. The data was derived from public domains such as a solar PV watts calculator from National Renewable Energy Laboratory (NREL) and solar system online commercial quotes from Treetops which is a solar system South African based installation company. Thereafter, the data was inputted in the study’s investment appraisement. The findings of the financial simulated investment appraisal prove to be lucrative for McDonalds South Africa to undertake the investment in solar energy. The investment is rewarding in the longer-term compared to the shorter-term considering the initial outlay. The simulation process and the investment appraisal in this study contributes to the knowledge base of the South African fast-food sector and can be adapted and used by businesses to evaluate the feasibility of a solar energy investment.
Financing of state-owned entities : can the trade-off theory explain the debt structure?
(Research Synergy Foundation, 2023) Abbana, Sharanam Sharma; Marimuthu, Ferina
The purpose of this research is to determine if the financing behaviour of South African state-owned entities (SOEs) have a target capital structure which they adjust towards and if so, the speed of adjustment, a central tenet of the Trade-off Theory. An unbalanced panel data set from a sample of thirty-three commercial SOEs were studied using a dynamic partial adjustment model. The findings provide strong evidence that South African SOEs follow the trade-off theory based on the existence of a target capital structure and speed of adjustment of 21.5% per annum towards the target which is slower than other SOEs in developing economies. The findings also revealed that these SOEs take almost five years to close off two-thirds of the gap between the actual and optimal capital structures. The findings will be of interest to observers of the economy, as they measure the capacity of SOEs to play a leading role in investment and in improving the efficiency of the economy. They could also inform decision making and policy development on SOEs.