Orbit Limited Statement of Financial Position 20222021 RRASSETS Non-Current Assets 11 810 000 7 560 000 Property, Plant, and Equipment 10 025 000 6 250 000 Investments 1 785 000 1 310 000 Current Assets 4 190 000 4 690 000 Inventories 1 875 000 2 350 000 Accounts Receivable 1 925 000 2 200 000 Cash 390 000 140 000 Total Assets 16 000 000 12 250 000 EQUITY AND LIABILITIES Equity ? ? Ordinary share capital 5 480 000 3 680 000 Retained earnings ? ? Non-current liabilities 4 500 000 3 800 000 Loan (20% p/a) 4 500 000 3 800 000 Current liabilities 2 300 000 1 500 000 Accounts Payable 2 300 000 1 500 000 Total Equity and Liabilities 16 000 000 12 250 000

Statement of Comprehensive Income for the year ended 31 December Sales 10 800 000 7 150 000 Cost sales -6 000 000 -3 650 000Gross profit 4 800 000 3 500 000 Operating Expenses -1 800 000 -1 200 000Depreciation 580 000 200 000 Other selling, general and admin expenses 1 220 000 1 000 000 Operating profit 3 000 000 2 300 000 Investment Income ? ? Interest expense -880 000 -600 000profit before tax 2 600 000 2 030 000 Company tax -728 000 -568 400Profit after tax 1 872 000 1 461 600

All sales and purchases of inventory are on credit. Inventories on 31 December 2020 amounted to R1 500 000. Credit terms of 5/10 net 90 days are granted by creditors. Credit terms of 60 days are granted to debtors. Dividends declared for the years ended 31 December 2021 and 2022 amounted to R1 169 280 and R1 422 000 respectively.

Calculate the following.

1. Equity for 2021 and 2022

2. Retained Earnings 2021 and 2022

3. Investment Income 2021 and 2022

4. Calculate the increase in the retained earnings over the two-year period.

5. By how much did the interest income increase or decrease from 2021 to 2022? Provide a possible reason for the change.

6. Comment on the investing activities of the company.

7. Calculate the amount that would be reflected as Changes in working capital in the Statement of Cash Flows for the year ended 31 December 2022.

8. Without making use of any ratios, provide an interpretation of the following over the two-year period:

a) Inventories

b) Accounts receivable

9. Calculate the cost (as a percentage) of not accepting discounts from creditors in settlement of accounts.