QUESTION 1 (25 Marks) REQUIRED Study the Statement of Financial Position as of 31 December 2021 and 2020 before answering the following questions: 1.1 Calculate the amount that would be reflected as Working capital changes in the Statement of Cash Flows for the year ended 31 December 2021. (4 marks) 1.2 Did the company expand its operations during 2021? Motivate your answer. (3 marks) 1.3 Is the long-term loan correctly disclosed in the Statement of Financial Position? Explain. (2 marks) 1.4 Is the company in good financial health? Motivate your answer by referring to at least SIX (6) items on the statement. Ratios are not required. (12 marks) 1.5 Calculate the ratios (expressed to two decimal places) that would reflect the following: 1.5.1 A measure of the companys ability to settle its short-term obligations within twelve months. (2 marks) 1.5.2 A measure of the number of total assets that are financed by creditors instead of investors. (2 marks) INFORMATION Lomax Ltd commenced operations at the start of 2020 manufacturing only standard-sized bricks for the building industry. Its financial position at the end of 2020 and 2021 is evident in the statements provided below: LOMAX LTD STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: 2021 2020 R R ASSETS Non-current assets Property, plant and equipment (Cost) ? ? Accumulated depreciation (500 000) (365 000) Carrying value ? ? Investments 2 700 000 3 150 000 Current assets Inventories 193 500 29 000 Accounts receivable 1 300 000 1 100 000 Cash 235 000 194 500 6 500 000 6 680 000 EQUITY AND LIABILITIES Equity Share capital 745 000 630 000 Retained earnings 2 380 000 4 450 000 Shareholders equity 3 125 000 5 080 000 Non-current liabilities Long-term loan 2 580 000 880 000 Current liabilities Accounts payable 95 000 120 000 Other current liabilities 700 000 600 000 6 500 000 6 680 000 Note 1. There was no significant change in the sales figures over the two years. 2. R240 000 of the long-term loan is expected to be repaid in 2022.