QUESTION 3 (25 Marks)

Extracts of the financial statements of HP Limited for 2023 are given below. INFORMATION HP Limited Extract of the Statement of Comprehensive Income for the year ended 31 December 2023

R Sales1 360 000 Cost of Sales(850 000) Gross Profit510 000Operating Profit306 000 Interest Expense(34 000) Profit before tax272 000Net Profit after tax195 840

Extract of the Statement of Financial Position as at 31 December 2023

Required: Calculate the following ratios for 2023. Where applicable, round off answers to two decimal places: 3.1 Operating profit on turnover (5) 3.2 Current ratio (5) 3.3 Acid test ratio (5) 3.4 Interest cover (5) 3.5 Return on assets (5)

QUESTION 4 (25 Marks)

4.1 You want to begin saving for your daughters college education and you estimate that she will need R240 000 in 17 years. If you feel confident that you can earn 7.5% per year, how much do you need to invest today? (6)

4.2 Suppose your company expects to increase unit sales of widgets by 14% per year for the next 8 years. If you currently sell 2.5 million widgets in one year, how many widgets do you expect to sell in 6 years? (6)

4.3 You are looking at an investment that will pay R1 800 in 3 years if you invest R400 today. What is the implied rate of interest? (8)

4.4 You want to purchase a new car and you are willing to pay R500 000. If you can invest at 14% per year and you currently have R350 000, how long will it be before you have enough money to pay cash for the car?