INFORMATION The extracts of the financial statements of Disney Limited for 2020 and 2021 are provided below. Disney Limited Statement of Comprehensive Income for the year ended 31 December 2021 R Sales 1 960 000 Cost of sales 1 240 000 Operating profit 472 000 Interest expense 48 000 Profit before tax 424 000 Profit after tax 305 280 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: 2021 (R) 2020 (R) Assets Non-current assets 2 320 000 1 960 000 Inventories 720 000 440 000 Accounts receivable 360 000 500 000 Cash and cash equivalents 440 000 340 000 3 840 000 3 240 000 Equity and liabilities Equity 2 960 000 2 040 000 Non-current liabilities 480 000 820 000 Accounts payable 400 000 380 000 3 840 000 3 240 000 Additional information 1. The profit after tax for the year ended 31 December 2020 was R240 000. 2. All purchases and sales of inventories are on credit.

Will the company be able to pay its short-term debts if business conditions are unfavourable? Use an appropriate ratio to motivate your answer. 3.2 (4 marks)

Comment on the returns of the shareholders on their investments (expressed to two decimal places) over the two-year period (2021 and 2022). Motivate your answer with the relevant calculations. 3.3 (4 marks)