Please can you assist with Question 1 Thank you........... CEO FINANCIAL risk amd Business risk report to be done below information - - - - - - - - - - A review of Lawn Lift's financial statements has revealed the following:? The Company's share price is R250, with a current dividend yield of 8%. Dividends will grow at a constant rate of 3%. There are 5 000 000 shares in issue.? The Company's target capital structure comprises a debt to equity ratio of 50%. ? The Company's only debt is comprised of listed convertible debentures. Lawn Lift has 10 000 000, R100 par value debentures in issue. The debentures bear a coupon of 5% and are each convertible to 0,40 shares in 3 years' time. Should the debenture holders choose not to convert their debentures, each debenture will be redeemed at a premium of 20% on par value. The yield to maturity on similar debentures is 6%.The management of Agricore has provided you with the following:? Agricore's cost of equity is likely to attract a risk premium of 2% relative to Lawn Lift's cost of equity.? Dividends per share and free cash flows will grow by 4% indefinitely from 2024.? Agricore has a target capital structure associated with a debt ratio of 50%.? The coupon rate on Agricore's debt is 9,59% and the debt's yield to maturity is estimated at 12%.As part of the due diligence assignment, a ratio analysis of Agricore's financial statements for 2021 relative to 2020 and relative to the industry will be undertaken.---------REQUIRED : 1 - Discuss, in the form of a report to the CEO of Lawn Lift, how the business risk and the financial risk of Agricore have changed in 2021 relative to 2020, and relative to the fertiliser industry.

Statement of Financial Position tor Agricore Actual Forecast 2020 2021 2022 2023 R'000 R'000 R'000 R'000 Non-current Assets PPtE (Note 1) 176 000 171 000 165 000 170 000 Investments (Note 2) 5 000 5 000 10 000 10 000 181 000 176 000 1'5 000 180 000 Current Assets Inventory (Note 3) 15 000 24 000 22 000 20 000 Accounts Receivable 6 000 10 000 9 000 10 000 Cash (Note 4) 53% m 11 m 209 000 21 3 000 217 000 218 000 Equy Share Capital (1 million 1 000 1 000 1 000 1 000 shares) Retained earnings 122 324 123 288 131 748 141 000 Non-current Liabilities Debentures (Note 5) 73 000 73 000 73 000 73 000 Current Liabilities Trade Creditors 12 676 15 712 11 252 3 000 209 000 21 3 000 217 000 218 000 Notes: 1. There are expected to be no additions to FPE in 2022 and there are expected to be no disposals in 2023, All disposals in 2022 occur at book value. The company expects to incur capital expenditure ot R1m per annum from 2024 onward. 2. Investments are carried at cost. 3. Closing inventory in 20191olalled R12 million. 4. Cash represents funds necessary to advance the operations of Agricore. 5. The debentures are redeemable at par value in five years' time as from the end of 2021. Statement of Comprehensive Income for Agricore Actual Forecast 2020 2021 2022 2023 R'000 R'000 R'000 R'000 Sales (note 1) 86 250 91 500 95 750 96 000 Investment Income (note 1 250 1 500 1 750 2 000 2) LALL 7 Cost of Sales (note 3) (41 250L (54 SOUL Administration expenses (12 OOOL (16 COOL Other operating expenses (5 600} (9 000) (note 3) Finance charges [7 000} 'i' 000 Net Prot before Tax 21 650 6 200 Taxation (note 4) 6 062} (1 736 Net Prot after Tax 15 588 4 464 Other Comprehensive ; ; Income Total Comprehensive 15 583 4 464 Income Dividends 5 250 3 500 Notes: 1. Three quarters of sales are on credit and this is expected to continue into the toreseeable future. Sales in 2019 totalled R80 million. Inflation in 2021 was 6%. Z. This comprises dividend income and Is non-taxable. 3. Depreciation of R5 million per annum was charged lrom 2020 to 2021. This is expected to continue in 2022. A depreciation charge of R4 million in 2023 is expected. This reduction in depremalion is the result of an anticipated impainnen of R5 million in 2023 in the value of fertiliser equipment and has been included ir the \"other operating expenses" figure. This impairment is likely to arise from the oversupply of nitric acid producing equipment and is an allowable deduction by SARS. Wear and tear on non-current assets totalled R5 million per annum from 2020 to 2023, Only inventory purchases are on credit. 4. Taxation is levied at 28%. In calculating the taxation charge. the bookkeeper simply multiplied net profit before tax by 28%. The following rations for 2021 of the fertiliser industry have been made available to you: Current ratio 1.75 Operating Cycle (based on 365 days per annum) 25 days Long term debt ratio 45% Sales growth 12% Gross profit margin 40%