Question 2 (45 Marks) The statement of Profit and Loss and other Comprehensive Income and the Statement of Financial Position as at 28 February 2021 for Sefika Ltd is presented below: Sefika Ltd Statement of Profit and Loss and other Comprehensive income for the year ended 28 February 2021 Revenue from Sales Cost of Sales Gross Profit Operating expenses: Loss on disposal of plant and equipment Other operating expenses Finance cost: Interest expense Profit before tax Income tax expense Profit for the year Sefika Ltd Statement of Financial position as at 28 February 2021 N$ 2021 N$ 2 081 800 (1312 600) 769 200 (386 400) (8 000) (378 400) (75 200) 307 600 (68 400) 239 200 N$ 2020 ASSETS Non-Current Assets: 890 000 824 000 Land and building at cost 725 000 600 000 Plant and equipment at cost 531 000 504 000 Accumulated depreciation- plant and equipment (366 000) (280 000) Current Assets: 895 200 722 000 Inventory 360 000 440 000 Account receivables 200 000 240 000 Prepaid expense Cash and cash equivalent EQUITY AND LIABILITY Capital and Reserve: 1 200 334 000 1 785 200 2000 40 000 1546 000 900 200 706 000 FACULTY OF COMMERCE, MANAGEMENT AND LAW Share capital Retained earnings Non-Current liability: Mortgage loan Current liability: Account payables Tax liability Shareholders for dividend Additional information: 17 475 000 400 000 425 200 306 000 645 000 560 000 240 000 280 000 128 000 194 000 52 000 36 000 60 000 1785 200 50 000 1 546 000 1. Plant and equipment which cost N$48 000 were sold and accumulated depreciation to the date of sale amounted to N$34 000. 2. Included in other operating expenses is a depreciation expense of N$120 000. YOU ARE REQUIRED TO: 1. Prepare a statement of Cash Flows for Sefika Ltd for the year ended 28 February 32021, using the direct method. (27 marks) 2. Prepare the note to reconcile the cash generated from operations to profit before tax. (5 marks) 3. Use the financial information presented in the statement of profit or loss and other comprehensive income and the statement of financial position for Sefika Ltd above, and calculate the following unknown ratios: (8 marks) 3.1 Gross margin % 3.2 Net margin % 3.3 Debt ratio % 3.4 Debt to Equity 3.5 ROE % 3.6 ROCE % 2021 2020 ? 25% ? 15% ? ? ? ? ? 11% ? 8% 4. Comment briefly on the gearing and profitability position of Sefika Ltd. (5 marks)