Green Tree (GT) Limited and Organic Products (OP) Limited are companies involved in the production of health products. The financial statements of the 2 companies are shown below. Organic Products (OP) Limited Green Tree (GT) Limited Revenue Cost of sales Gross profit Operating costs Net operating profit Interest and other income Earnings before interest and tax (EBIT) Interest expense Profit before tax Income tax expense Net profit 2021 R'000 548 200 (266 500) 281 700 (154 101) 127 599 36 540 164 139 (15 669) 148 470 (44 541) 103 929 2021 R'000 515 960 (225 620) 290 340 (156 630) 133 710 28 600 162 310 (29 560) 132 750 (39 825) 92 925 2021 R'000 2021 R'000 ASSETS Total non-current assets Inventories Trade and other receivables Cash and cash equivalents 887 644 55 602 65 320 15 362 967 857 45 200 68 050 10 220 TOTAL ASSETS 1023 928 1 091 327 EQUITY AND LIABILITIES Total equity Total non-current liabilities Trade and other payables 789 425 189 203 45 300 804 127 231 000 56 200 TOTAL EQUITY AND LIABILITIES 1023 928 1091 327 Both companies have an issued share capital of 10 million ordinary shares. The current market price per share for Green Tree (GT) Limited is R12 and R13,50 for Organic Products (OP) Limited. The gearing ratio for Green Tree (GT) Limited is 22,90% and 26,32% for Organic Products (OP) Limited. . The non-current liabilities are consisting of long-term debt that is long-term interest bearing debt with the current portions being nil. REQUIRED: (0) Show the formula and detailed calculations of the following ratios for 2021 for both companies. [Use four decimals in your calculations and round your final answer to two decimals.] (ii) Briefly explain what the ratio means/indicates (iii) Compare the ratios of the two companies, and (iv) Discuss the indications and possible implications of the ratios. (5) a) b) C) d) e) f) g) Gross profit margin Current ratio Inventory turnover rate Interest cover ratio Debt to equity ratio (based on carrying values) Earnings per share Price/Earnings ratio GGGGGGG (5) (5) (5) [35] QUESTION 3 (13 marks) The debtors ageing schedule of three businesses is supplied as at the end of April 2021. All businesses have approximately the same (Rand) balance for accounts receivable. Days outstanding 0 - 15 16 - 30 31 - 60 60 + Total (R) Lex Rex 500 699 455 200 499 650 680 500 450 600 905 000 150 336 352 650 258 500 286 301 400 890 1 617 836 1 659 340 1 663 150 Tex The credit terms offered to the customers of Lex are: 2,5/15 net 30 The credit terms offered to the customers of Rex are: 2/15 net 30. The credit terms offered to the customers of Tex are: 4/30 net 60. REQUIRED: a) Calculate the percentage of the total for each period of days for all three businesses. (4) b) (5) Analyse the three debtors ageing schedules and briefly explain what it indicates for each of the businesses. Discuss four possible issues to be considered by each business by referring to the four specific focus areas of the credit policy. c) (4)