equity. Calculate its cost of capital. (17) 4.2 A further R800 000 is needed to finance the expansion. Which option should they use (fre shares, preference shares or loan financing)? Provide a reason for your answer. (3) [OS] QUESTION FIVE [20] The following information has been extracted from the financial statements of YDI Limited: med as bolites ays O Extract of Statement of Comprehensive Income for the year ended 31 December 2019 2018 R R (8 Sales 2 000 000 1 600 000 Cost of sales 940 000 800 000 600 000 520 000 Operating profit 16 noluna 10 Profit before tax 520 000 450 000 Profit after tax 364 000 315 000 8 REGENT BUSINESS SCHOOL (RBS) January 2020 DIPLOMA IN MANAGEMENT - ACADEMIC AND ASSESSMENT CALENDAR Extract of Statement of Financial Position as at 31 December Assets 2019 2018 R R Non-current assets Inventories Accounts receivable Cash and cash equivalents 2 000 000 600 000 400 000 2 000 1 400 000 800 000 400 000 2000 2 602 000 3 002 000 R R 2 000 000 Equity and liabilities Shareholders' equity Long-term loan Accounts payable Bank overdraft 1 500 000 800 000 700 000 182 000 120 000 142 000 160 000 3 002 000 2 602 000 Note: 1. All purchases and sales of inventories are on credit. 2. Dividends paid during the year amounted to R218 400. 3. The issued share capital consisted of 500 000 ordinary shares. Required: 5.1 Calculate the following ratios for the year ended December 2019. Where applicable, round off answers to two decimal places. (2) Operating margin (2) 5.1.2 Debtors collection period (2) 5.1.1 5.1.3 Acid test ratio (2) 5.1.4 Return on equity 30 Ianuary 2020 CALENDAR Extract of Statement of Financial Position as at 31 December Assets 2019 R 2018 R Non-current assets Inventories Accounts receivable Cash and cash equivalents 2 000 000 600 000 400 000 2 000 3 002 000 1 400 000 800 000 400 000 2000 2 602 000 R R Equity and liabilities Shareholders' equity Long-term loan Accounts payable Bank overdraft 2 000 000 700 000 1 500 000 800 000 142 000 182 000 120 000 3 002 000 160 000 2 602 000 Note: 1. All purchases and sales of inventories are on credit 2. Dividends paid during the year amounted to R218 400. 3. The issued share capital consisted of 500 000 ordinary shares. Required: 5.1 Calculate the following ratios for the year ended December 2019. Where applicable, round off answer to two decimal places. 5.1.1 Operating margin (2) 5.1.2 Debtors collection period (2) 5.1.3 Acid test ratio (2) (2) 5.1.4 Return on equity