QUESTION 2 [40 MARKS]

2.1 Consider the following information for SCE Enterprises (for 10 000 units of output) and calculate the total cost for 35 000 unit of output, as well as the cost per unit. Variable cost: R85 000 Fixed cost: R40 000 Semi-variable cost (30% fixed): 95 000 (9)

2.2 SPP Enterprises provide you with the following information: Total liabilities: R 3000 000 Total assets: R4 200 000 8% preference shares: R250 000 Net profit after tax: R280 000 Use the information provided and calculate the: Return on total equity ratio Return on common equity ratio. (9)

2.3 Obtain the financial statements (annual report) of any two listed companies and critically assess the liquidity and profitability of the two companies. The following is required: Detailed introduction of your chosen companies (i.e. nature of their business activities) Identify two ratios (show formulas) that will enable you to assess the liquidity of the chosen companies Identify two ratios (show formulas) that will enable you to assess the profitability of the chosen companies Calculation of two liquidity ratios per company Calculation of two profitability ratios per company Overall assessment of the two companies in terms of the ratios calculated (i.e. compare the two companies in terms of liquidity and profitability) Be sure to attach all supporting document such as the statements that were used for calculation purposes. (22)