2.3 A profit is not everything desirable in a business. It is important to know whether or not the business will be able to meet its commitments as they fall due. The following statement of the financial position of Martins and Sons' Company is given as of 30 September 2020. STATEMENT OF FINANCIAL POSITION OF MARTINS & Sons COMPANY AS AT 30 SEPTEMBER 2020 Fixed Asset Machinery 108 000 108 000 Current Assets Stock Work in progress Debtors Cash in bank 7 700 3 300 47 500 23 700 82 200 Current Liabilities Creditors 35 700 Current Assets - Current Liabilities 46 500 154 500 Capital Employed Equity Profit Loan 84 000 24 700 15 000 123 700 2.3.1 Calculate the current ratio for Martins & Sons' Company. (3) 2.3.2 What conclusion can you draw from the value of the current ratio calculated in 2.3.1? (2) 2.3.3 Calculate the quick ratio for Martins & Sons' Company. (3) 2.3.4 What conclusion can you draw from the value of the quick ratio calculated in 2.3.3? (2) 6 [TURN OVER] MAE203P Sept/Oct/Nov 2021 2.3.5 Would you invest your money in Martins & Sons company? Justify your answer. (3) 2.4 Martins & Sons buys machinery for their company on hire purchase. The machinery costs R130 000. Martins & Sons pay a 35% deposit on the cash price and will have to pay monthly instalments of R3 950 for two years. Another customer buys the same model of machinery but chooses another option where he has to pay a 10% deposit on the cash price and monthly instalments of R4 600 for three years. 2.4.1 Calculate the HP price for both options. (4) 2.4.2 Calculate the difference between the total price paid by Martins & Sons and by the other customer. (2) 2.3 A profit is not everything desirable in a business. It is important to know whether or not the business will be able to meet its commitments as they fall due. The following statement of the financial position of Martins and Sons' Company is given as of 30 September 2020. STATEMENT OF FINANCIAL POSITION OF MARTINS & Sons COMPANY AS AT 30 SEPTEMBER 2020 Fixed Asset Machinery 108 000 108 000 Current Assets Stock Work in progress Debtors Cash in bank 7 700 3 300 47 500 23 700 82 200 Current Liabilities Creditors 35 700 Current Assets - Current Liabilities 46 500 154 500 Capital Employed Equity Profit Loan 84 000 24 700 15 000 123 700 2.3.1 Calculate the current ratio for Martins & Sons' Company. (3) 2.3.2 What conclusion can you draw from the value of the current ratio calculated in 2.3.1? (2) 2.3.3 Calculate the quick ratio for Martins & Sons' Company. (3) 2.3.4 What conclusion can you draw from the value of the quick ratio calculated in 2.3.3? (2) 6 [TURN OVER] MAE203P Sept/Oct/Nov 2021 2.3.5 Would you invest your money in Martins & Sons company? Justify your answer. (3) 2.4 Martins & Sons buys machinery for their company on hire purchase. The machinery costs R130 000. Martins & Sons pay a 35% deposit on the cash price and will have to pay monthly instalments of R3 950 for two years. Another customer buys the same model of machinery but chooses another option where he has to pay a 10% deposit on the cash price and monthly instalments of R4 600 for three years. 2.4.1 Calculate the HP price for both options. (4) 2.4.2 Calculate the difference between the total price paid by Martins & Sons and by the other customer. (2)