Question 2: (25 marks) Bravo (Pvt) Ltd, a computer hardware manufacturer, has obtained accounting ratios relating to averages for similar organisations in the industry. The average ratios for the period 1 January 2017 to December 2017 are as follows: Return on capital employed 21.6% Net assets turnover 1.6 times 25% G Gross profit margin Net profit (before tax) margin Current ratio 10.5% 1.5:1 0.8:1 42 days 41 days Quick ratio Inventory holding period Trade receivable collection days Trade payables payment period V Debt to equity Dividend yield Dividend cover 59 days 35% 5% 4 times Tanar 2017 to 31 December The summarised financial statements for Liquidity for the period 1 January 2017 to 31 December 2017 are as follows: Income statement P Sales revenue 4 850 000 Cost of sales (3 740 000) 1 110 000 Gross profit Other operating expenses (430 000) 680 000 Operating profit Interest payable (68000) Loss on sale of obsolete stock (240 000) Profit before tax 372 000 Tax (180 000) Profit after tax 192 000 358 000 192 000 Changes in equity Retained profits 1 January 2017 Net profit for the period Dividend paid Retained profit 31 December 2017 Statement of financial position (180 000) 370 000 P Non-current assets 1 080 000 Current assets: Inventory 550 000 Trade receivables 640 000 1190 000 Total assets 2 270 000 Share capital and reserves: Ordinary 50p shares X364 300 000 Retained profits 370 000 670 000 Interest payable (68 000) (240 000) Loss on sale of obsolete stock Profit before tax 372 000 Tax (180 000) Profit after tax 192 000 358 000 Changes in equity Retained profits 1 January 2017 Net profit for the period Dividend paid 192 000 (180 000) Retained profit 31 December 2017 370 000 Statement of financial position P Non-current assets 1 080 000 Current assets: Inventory 550 000 Trade receivables 640 000 1 190 000 Total assets 2270 000 Share capital and reserves: X 36 st Ordinary 50p shares 300 000 Retained profits 13 370 000 670 000 Retained profits 370 000 670 000 Non-current liabilities: Recenables 4850ow 7% loan note 600 000 X 365 660000 Current liabilities: Bank overdraft 130 000 Trade payables 700 000 Tax 170 000 1 000 000 Total equity and liabilities 2270 000 The following information is also relevant: The no-current assets cost P7 200 000 and accumulated depreciation as at 31 December 2017 is P6 120 000 Liquidity's ordinary shares averaged a market price of P12 throughout the period. Required: Calculate (to one decimal place) the ratios for Bravo (Pvt) Ltd equivalent to those for the industry averages. (25 marks)