QUESTION 2 (35 marks)

Green Tree (GT) Limited and Organic Products (OP) Limited are companies involved in the production of health products. The financial statements of the 2 companies are shown below.

MAC2602/001/3/2021

Organic Products (OP)

M w R'000 R'000 Revenue 548 200 515 960 Cost of sales (266 500) (225 620) Gross profit 281 700 290 340 Operating costs (154 101) (156 630) Interest and other income 36 540 28 600 Earnings before interest and tax (EBIT) 154 139 152 310 Interest expense (15 669) (29 560) Prot before tax 143 470 132 750 Income tax expense (44 541) (39 325) Net Pm'\"t 103 929 92 925 M M R'000 R'000 ASSETS Total non-current assets 88? 644 967 857 Inventories 55 602 45 200 Trade and other receivables 65 320 68 050 Cash and cash equivalents 15 362 10 220 TOTAL ASSETS 1023.926 1.091322 EQUITY AND LIABILITIES Total equity 789 425 804 127 Total non-current liabilities 189 203 231 000 Trade and other payables 45 300 56 200 TOTAL EQUITY AND LIABILITIES 1.023.928 1091.321