Nirli Corporation Ltds Statement of Financial Position for the 2018 and 2019 financial years are as follows:

Assets 2019(R) 2018(R)

Non-Current Assets 5 000 000 3 800 000

Inventory 500 000 700 000

Receivables 350 000 420 000

Cash 280 000 140 000

6 130 000 5 060 000

Equity and Liabilities

Share Capital (R2 shares) 2 600 000 1 700 000

Retained Income 500 000 940 000

Long term Debt 2 000 000 1 800 000

Payables 1 030 000 620 000

6 130 000 5 060 000

The abbreviated Statement of Comprehensive Income for the year ended 2019 reflects the following:

R

Sales (75% on credit) 2 400 000

Cost of sales 1 600 000

Depreciation 62 000

Interest expense 96 000

Tax (30%) 160 000

Net Income after tax 300 000

Dividends 240 000

Retained Income 60 000

NB: Their shares are currently trading at R3 per share.

Required:

4.1 Calculate the gross profit margin and net profit margin. (4)

4.2 Calculate the Earnings Per Share (EPS) and Dividends Per Share (DPS) for the current year. Explain what occurs to the difference between the EPS and the DPS value. (6)

4.3 Calculate the return on equity. Will shareholders be happy with this return? Explain. (2)

4.4 Calculate and comment on the acid test ratio for both years. (5)

4.5 Calculate and comment on the debt equity ratio for both years. (5)

4.6 Calculate the stock turnover rate and explain the meaning of this ratio. (3)