MANCOSA: ADVANCED DIPLOMA IN BUSINESS MANAGEMENT statement of Financial Position as at 31 December: Assets Non-current assets 2019 (R) 2018 (R) Plant and equipment 1 320 000 1 080 000 Accumulated depreciation 2 400 000 1 12 000 000 Investments (1 150 000) (1 000 000) Current assets 70 000 BO 000 Inventories 910 000 8.30 000 Accounts receivable 430 000 410 000 Cash and cash equivalents 380 000 350 000 100 000 Total assets 70 000 2 230 000 1910 000 Equity and liabilities Equity 1 220 000 1 120 000 Ordinary share capital (155 000 shares) Retained earnings 620 000 620 000 600 000 500 000 Non-current liabilities 720 000 670 000 Current liabilities 290 000 120 000 Accounts payable 240 000 54 000 Dividends payable 40 000 50 000 Income tax payable 10 000 16 000 Total equity and liabilities 2 230 000 1910 000 Note: Dividends paid and recommended during 2019 amounted to R60 000 . All purchases and sales of inventories are on credit. QUESTION 4 (20) REQUIRED 4.1 Use the information from Question 3 to calculate the following ratios for 2019 (answers expressed to two decimal places): 4.1.1 Inventory turnover 4.1.2 Interest cover 4.1.3 Net profit margin 4.1.4 Return on equity 4.1.5 Earnings per share 4.1.6 Dividends per share 4.1.7 Acid test ratio 4.1.8 Debt to assets 4.2 Refer to the ratios calculated in question 4.1 and answer the following questions: 4.2.1 Will the shareholders be satisfied with their return on investment? Explain 4.2.2 Will the company be able to pay its short-term debts if inventories are not sold? Why? MANCOSA: ADVANCED DIPLOMA IN BUSINESS MANAGEMENT statement of Financial Position as at 31 December: Assets Non-current assets 2019 (R) 2018 (R) Plant and equipment 1 320 000 1 080 000 Accumulated depreciation 2 400 000 1 12 000 000 Investments (1 150 000) (1 000 000) Current assets 70 000 BO 000 Inventories 910 000 8.30 000 Accounts receivable 430 000 410 000 Cash and cash equivalents 380 000 350 000 100 000 Total assets 70 000 2 230 000 1910 000 Equity and liabilities Equity 1 220 000 1 120 000 Ordinary share capital (155 000 shares) Retained earnings 620 000 620 000 600 000 500 000 Non-current liabilities 720 000 670 000 Current liabilities 290 000 120 000 Accounts payable 240 000 54 000 Dividends payable 40 000 50 000 Income tax payable 10 000 16 000 Total equity and liabilities 2 230 000 1910 000 Note: Dividends paid and recommended during 2019 amounted to R60 000 . All purchases and sales of inventories are on credit. QUESTION 4 (20) REQUIRED 4.1 Use the information from Question 3 to calculate the following ratios for 2019 (answers expressed to two decimal places): 4.1.1 Inventory turnover 4.1.2 Interest cover 4.1.3 Net profit margin 4.1.4 Return on equity 4.1.5 Earnings per share 4.1.6 Dividends per share 4.1.7 Acid test ratio 4.1.8 Debt to assets 4.2 Refer to the ratios calculated in question 4.1 and answer the following questions: 4.2.1 Will the shareholders be satisfied with their return on investment? Explain 4.2.2 Will the company be able to pay its short-term debts if inventories are not sold? Why