question 1.2

FINANCIAL MANAGEMENT Question 1 [33] 1.1. The management of Globe Travel (Pty) Ltd extracted the following information from the accounting records for the financial year ending 30 June 2020: Depreciation R25 000 Administration expenses R220 000 Sales R3 450 000 Sales expenses R180 000 Cost of goods sold R2 550 000 Lease expense R40 000 Interest expense R30 000 Dividends on preference shares R35 000 Dividend per ordinary share R0.50 Number of ordinary shares in issue 900 000 Tax rate 28% Required: Use the information provided to calculate the earnings per share (EPS) and the net profit margin Show all calculations. (12) 1.2. You are a business journalist reporting on the financial performance of companies. In a recent interview with the CEO of an engineering company, the CEO stated that the company is performing very well at present and because it is using the most modern engineering technology while at the same time keeping its inventory levels low. The CEO stated that the use of state-of-the-art technology coupled with low inventory levels will soon result in the company achieving high profit levels. The CEO presented the following ratio analysis to support his statements: 2017 2018 2019 2020 Current ratio 1.30 1.70 1.90 2.10 Quick ratio 1.20 0.80 0.50 0.40 Required: Do you agree with the CEO's statement about profits? Use the information provided in the table to explain your answer. (14)