QUESTION 3 (15 marks)

HEALTH and SAFETY (PTY) LTD (H&S) is a wholesaler of Personal Protective Equipment. At the Beginning of the year 2020, H&S expanded its retail business by adding over 50 shops in order to meet the demand for protective gear. The following information has been extracted from the comparative financial statements included in the company's 2019 annual report (all amounts are in thousands of Rands):

	Dec. 31, 2019	Dec. 31, 2018
Total liabilities	R26 000	R18 000
Total shareholders' equity	34 000	38 000
Depreciation expense	R 2 000	R 6 000
Interest expense	3 400	3 200
Income tax expense	12 600	18 100
Net income / (profit)	6 000	15 000
Net cash provided by (used for) operations	41 000	(400)
Total dividends paid	2 000	12 000
Cash used to purchase plant assets	32 000	18 000
Payments on long-term debt	1 600	1 800
Using the information provided above, calculate the following for 2019 and 2018: a. Debt-to-equity ratio (at each year-end) (2)
b. Times interests earned ratio (2)
Comment briefly on the company's solvency. (4)
What other ratios will help you assess the solvency? What information will they provide that you do not already concerning the company's solvency? (2)