2 REQUIRED (25 Marks) 2.1 Use the information provided below to calculate the ratio for 2020 that would reflect each of the following. Where applicable, round off answers to two decimal places. 2.1.1 The extent to which the claims of short-term creditors are covered by assets that can be translated into cash in the short term (2 marks) 2.1.2 The extent to which long-term debt is covered by shareholders' funds (3 marks) 2.1.3 The amount of funds available relative to sales, to pay the company's expenses other than its cost of sales (3 marks) 2.1.4 The rand amount of distributions during the period on behalf of each ordinary share issued (3 marks) 2.1.5 An indication of the profit that has been put back into the company 2.1.6 The amount that investors are willing to pay for each rand of the company's earnings marks (3 marks) (3 2.2 ratios: Provide TWO (2) ways of making an improvement with regard to each of the following 2.2.1 Debtors collection period 2.2.2 Operating margin. (2 marks) (2 marks) 2.3 Comment briefly on the following ratios: 2.3.1 Acid test ratio 2.3.2 Return on equity 2020 2019 4.19:1 5.53:1 (2 marks) (2 marks) 24.16% 23.75% INFORMATION The information given below was obtained from the books of Hemrock Ltd for 2020 and 2019: STATEMENT OF FINANCIAL POSITIONS AS AT 31 DECEMBER: ASSETS 2020 2019 R R Non-current assets 1 680 000 Property, plant and equipment (cost) 1 660 000 Accumulated depreciation Long-term investments Current assets Inventory Debtors/Accounts receivable Company tax paid in advance Bank (420000) 440 000 2 040 000 700 000 1 060 000 1080 000 (320 000) 300 000 1900000 860 000 820 000 600 000 20 000 500 000 440 000 3 720 000 2 960 000 EQUITY AND LIABILITIES Equity 2 500 000 1772 000 Ordinary share capital Retained income Non-current liabilities Loan 900 000 Current liabilities 320 000 Creditors/Accounts payable 192000 1706 000 794000 900 000 1 000 000 772 000 1 000 000 1000 000 188 000 56 000 Divider.ds payable 128000 96 000 Company tax payable 36 000 3 720 000 2 960 000 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDING 31 DECEMBER 2020 Sales Cost of sales Gross profit Operating expenses Operating profit Interest income Interest expense Profit before tax Tax Profit after tax Additional information Interim dividends paid during 2020 amounted to R454 000. There were 170 600 shares in issue during 2020. The market price per share was R11.50 on 31 December 2020. R 5 600 000 (3 536 000) 2064 000 (1 064 000) 1 000 000 80 000 (216 000) 864 000 (260 000) 604 000