FINANCIAL MANAGEMENT [100] QUESTION ONE [25]

The following data was extracted from the records of DT Ltd on 28 February 2021, the end of their financial year:

R

Share capital (900 000 shares at R2 par value) 1 800 000

Retained income 160 000

Non-Current Assets 1 750 000

Inventories 220 000

Receivables 600 000

Cash/Bank 300 000

Payables 730 000

Loans at 15% p.a. 180 000

Net profit after tax 765 000

Market price of share 270c

Dividends per share 65c

Required:

1.1. Calculate and comment on each of the following ratios:

1.1.1. Current ratio (last year 2.33 : 1) (4)

1.1.2. Acid test ratio (last year 1.58 : 1) (4)

1.2. Calculate the Price Earnings (PE) ratio and explain what a low PE ratio could mean. (4)

1.3. Calculate the earnings per share. Will shareholders be happy with this? Why? (4)

1.4. Calculate the market to book ratio and explain the significance of this ratio. (4)

1.5. Calculate and comment on the debt equity ratio. (3)

1.6. Calculate the retained income for the year. (2)