Following information was taken from the financial statements of PARK Ltd$.$

REQUESTED:

$2\mathrm{.}1.$ Prepare the following:

$2\mathrm{.}1\mathrm{.}1.$ Complete the note for the reconciliation between the profit before the tax and cash generated from operations. $(8)$

$2\mathrm{.}1\mathrm{.}2.$ Complete the Cash flow statement for the year ended $28$ February $2010.(23)$

$2\mathrm{.}2.$ Calculate the following for $2010$:

$2\mathrm{.}2\mathrm{.}1.$ Working capital ratio

$2\mathrm{.}2\mathrm{.}2.$ Acid test ratio

$2\mathrm{.}2\mathrm{.}3.$ Net asset value per share

$2\mathrm{.}2\mathrm{.}4.$ Debt$/$Equity ratio $($Lever ratio$)$

$2\mathrm{.}3.$ Explain why the directors have decided to reduce the long term loan worth mentioning, to such extent during the present financial year. Was it$,$ according to you, a wise decision? Explain, by producing proof $($figures$/$financial indicators$)$ from the question.

$2\mathrm{.}4.$ Comment upon the returns on the shareholders equity, earnings and dividends of the shareholders. Produce proof $($figures$/$financial indicators$)$ from the question.

$2\mathrm{.}5.$ Calculate the premium at which the shares were issued.

$2\mathrm{.}6.$ The present shareholders are unhappy about the price at which the additional shares were sold. Discuss by producing ONE figure or financial indicator to support your answer.

INFORMATION:

$1.$ Extract from Income statement R

Depreciation $33500$

Interest$-$expense $164450$

Net profit before tax $844300$

Income tax $(30\%$ of net profit$)?$

$2.$ Balance sheet $28$ Feb $201028$ Feb $2009$

ASSET

Non $$ current assets $34908853017500$

Fixed asset at carrying value $34408852967500$

Fix deposit: ABSA $5000050000$

Current assets $320000231250$

Stock $251250110250$

Trade debtors $6000076000$

Cash and cash equivalents $125045000$

SARS $($ Income tax$)75000$

TOTAL ASSET $38108853248750$

EQUITY AND LIABILITY

Capital and reserves $31200001443000$

Ordinary share capital $20850001050500$

Share premium $2689700$

Retained income $766030392500$

Non$-$current liabilities $3000001525000$

Loan: ABSA at $15\%$ p$.$a$.3000001525000$

Current liabilities $390885280750$

Trade creditors $209945220475$

Bank overdraft $475000$

Shareholders for dividends $13344052525$

SARS $($Income tax$)07750$

TOTAL EQUITY AND LIABILITIES $38108853248750$

$3.$ ADDITIONAL INFORMATION:

a$.$ Additional new shares were issued half$-$way through the year on $31$ August $2009.$ These shares

do not qualify for the interim dividends.

b$.$ Fixed assets were sold for R$100000$ cash at carrying value.

c$.$ Earnings and dividends per share as follow:

$20102009$

Earnings per share $189$ cents per share $135$ cents per share

Total dividends $72$ cents per share $105$ cents per share

Interim dividends $40$ cents per share $80$ cents per share

Final dividends $32$ cents per share $25$ cents per share

d$.$ You are also presented with the following financial indicators:

$20102009$

$\%$ return on shareholders equity $26\%21\%$

$\%$ return on working capital applied$($after tax$)24\%10\%$

Net asset value per share $?687$ sent

d$.$ The price of the shares on the Johannesburg Security Market $($JSE$)$ varied between $680$ cents and

$780$ cents over the past year.