QUESTION 1 (20 Marks)

Vietnam Limited
Statement of Comprehensive Income for the year ended 31 December 2016 (extracts)
	R
Sales	779 000
Cost of sales	(727 200)
Gross profit	051 800
Selling, general and administrative expenses	(651 800)
Income from operations	000
Interest income	000
Interest expense	(24 000)
Profit before tax	000
Income tax (@30%)	?
Profit after tax	?
Earnings per share	cents

1.1

Required:

Study the statement of Comprehensive Income of Vietnam Limited for the year ended 31 December 2016 above and answer the following questions:

1.1.1 The earnings per share for the year ended 31 December 2015 was 89 cents.

Comment on the earnings per share from the point of view of the shareholders. (2 marks)

1.1.2 Provide two possible reasons why the gross profit margin is lower in 2016 than in 2015. (4 marks)

(63% in 2015)

1.1.3 Calculate the income tax liability, profit after tax and recommend two ways in which the (4 marks) company can improve its profitability.