(25) QUESTION ONE The financial statements of Crafters Limited is presented below: CRAFTERS LTD STATEMENT OF FINANCIAL POSITION As at 29 February 2020 29 February 2020 28 February 2019 Notes R R 1 254 000 ASSETS Non-current assets Property, plant and equipment Investments (listed shares) 1 146 000 996 000 150 000 1134 000 120 000 834 000 975 000 Current assets 48000 750000 Cash and cash equivalents Inventory Accounts receivable 480000 306000 225000 1980000 2229000 Total assets EQUITY AND LIABILITIES Equity and reserves Share capital Preference share capital Share premium Retained earnings 1 134 000 600000 180000 996 000 600000 60000 180000 60000 156.000 294,000 Non current liabilities 300 000 240 000 240000 15% Debentures 300000 546 000 Current liabilities Bank overdraft Dividends payable Accounts payable 993 000 330 000 18 000 645 000 24 000 522 000 Total equity and liabilities 1,980,000 2,229,000 ADDITIONAL INFORMATION: 1. Earnings before interest and taxation amounted to R 156 000 (2019: R125 000) 2. The following balances are available for 28 February 2019 Inventory R630 000 Accounts receivable R400 000 Accounts payable R575 000 3. Turnover for the year ended February 2020 amounted to R12 000 000 (2019: R10 000 000). The gross profit percentage is 25%. 4. Half of turnover (50 %) is credit sales and 75% of purchases are credit purchases REQUIRED: Prepare the following ratios for 2020 and comment on the ratios calculated using the ratios for 2019 {presented in brackets): - 1. Debt ratio {2019: 0,55:1} (6) 2. Current ratio (2019: 0,98: 1} (2) 3. Quick ratio {2019: 0,22:1} (2) 4. Debt/equity ratio {2019: 1,24:1} (4) RO 5. Debtors collection period {23 days) (3) 6. Creditors collection period {39 days) (4) 7. Solvency ratio {2019: 1,8:1} (4)