All members of the board were given the right of taking goods for personal and household consumption at a maximum cost of R 9,000 per month - this was not included in the remuneration package as it was the family tradition and business practice. Any goods taken in excess of the stipulated maximum amount was claimed from their salaries. Furthermore, the members of the board were granted free use of the company's vehicles (registered in the name of the company but the members had exclusive use of the vehicles). The cost of running and maintaining the vehicles were the responsibilities of the members except for the senior members who were the immediate children of the founding father. The Professional Accounts of the company presented the following schedule to the board as part of their value added service to their clients: Inventory Accounts receivables Cash and cash equivalent Sales Cost of Sales Trade payables Short term loan Insurance payable Dividends payable *2014 the value of the inventory was 130 0000 2016 180 000 210 500 58 000 1 500000 860 000 234 500 200 000 2 500 55 000 2015 160 000 175 800 55 400 900000 540 000 260 000 150 000 3 800 77 000 Mr. Rajah Singh, commented that the ratios mean nothing as it tries to present information in a generic format which does not tell the real story as the monetary values which reflect the true results and value of the business are hidden. Furthermore, he claims that the family business has survived the test of time by looking at the numbers (monetary amounts) in order to understand the performance and value of the business - he commented our forefathers did it that way and today we are enjoying the fruits of their wisdom; so why try to change". 1.9. Question: (a) Comment on the statement made by Mr. Rajah Singh about the use of ratios in the context of understanding the performance and value of the company. [4 marks] (b) Comment on the following ratios of the company over the past three years and provide the board with advice about the liquidity of the company. 1.1. Average inventory holding period 1.2. Settlement period from receivables 1.3. Settlement period for payable [20 marks] (c) Why might a company use various sources of finance? [5 Marks] (d) Using examples, explain why it is important that potential investors should consider non- financial factors before making their investment decision (4 marks] All members of the board were given the right of taking goods for personal and household consumption at a maximum cost of R 9,000 per month - this was not included in the remuneration package as it was the family tradition and business practice. Any goods taken in excess of the stipulated maximum amount was claimed from their salaries. Furthermore, the members of the board were granted free use of the company's vehicles (registered in the name of the company but the members had exclusive use of the vehicles). The cost of running and maintaining the vehicles were the responsibilities of the members except for the senior members who were the immediate children of the founding father. The Professional Accounts of the company presented the following schedule to the board as part of their value added service to their clients: Inventory Accounts receivables Cash and cash equivalent Sales Cost of Sales Trade payables Short term loan Insurance payable Dividends payable *2014 the value of the inventory was 130 0000 2016 180 000 210 500 58 000 1 500000 860 000 234 500 200 000 2 500 55 000 2015 160 000 175 800 55 400 900000 540 000 260 000 150 000 3 800 77 000 Mr. Rajah Singh, commented that the ratios mean nothing as it tries to present information in a generic format which does not tell the real story as the monetary values which reflect the true results and value of the business are hidden. Furthermore, he claims that the family business has survived the test of time by looking at the numbers (monetary amounts) in order to understand the performance and value of the business - he commented our forefathers did it that way and today we are enjoying the fruits of their wisdom; so why try to change". 1.9. Question: (a) Comment on the statement made by Mr. Rajah Singh about the use of ratios in the context of understanding the performance and value of the company. [4 marks] (b) Comment on the following ratios of the company over the past three years and provide the board with advice about the liquidity of the company. 1.1. Average inventory holding period 1.2. Settlement period from receivables 1.3. Settlement period for payable [20 marks] (c) Why might a company use various sources of finance? [5 Marks] (d) Using examples, explain why it is important that potential investors should consider non- financial factors before making their investment decision (4 marks]