Question 3 [34 marks] Dee-Chili Ltd has given you these financial statements for two financial years. Dee-Chili Ltd Statement of financial position as at 31 December 2018 NOTES 2018 2017 ASSETS 1,950,000.00 1,950,000.00 1,815,000.00 Non-Current Assets 1,815,000.00 PPE at carrying value Long-term investments 1,248,000.00 532,500.00 375,000.00 262,500.00 78,000.00 3,063,000.00 1,050,000.00 450,000.00 300,000.00 225,000.00 75,000.00 3,000,000.00 Current Assets Inventories 4 Accounts receivable Short-term investments Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Capital and Reserves Ordinary share capital (900 000 @ N$ 1 each) Retained profit 1,500,000.00 900,000.00 600,000.00 1,050,000.00 1,050,000.00 1,470,000.00 900,000.00 570,000.00 1,080,000.00 1,080,000.00 7 8 Non-current liabilities Mortgage Debentures Current Liabilities 450,000,00 513,000.00 Short-term borrowings 150,000.00 165,000.00 202,500.00 145,500.00 3,063,000.00 Accounts payable 195,000.00 Taxation 105,000.00 3,000,000.00 TOTAL EQUITY AND LIABILITIES 18 Dee-Chili Ltd Statement of profit or loss & other comprehensive income for the year ended 31 December 2018 NOTES 2018 4,500,000.00 (3,832,500.00) 667,500.00 22,500.00 22,500.00 690,000.00 (285,000.00) Sales Cost of Sales Gross Profit Other operating income Interest income Gross operating income Operating expenses Administration and selling expenses Depreciation Operating profit before interest and taxation 135,000.00 150,000.00 405,000.00 (105,000.00) 300,000.00 (120,000.00) 180,000.00 (150,000.00) 30,000.00 1 Interest expense Net profit before taxation Taxation Net profit attributable to ordinary shareholders Dividends Retained profit/(loss) for the year Retained profit beginning of the year 570,000.00 600,000.00 2 RETAINED PROFIT END OF THE YEAR Additional Information: 2017: 3.5 times Times interest earned Dividends per share 2017: 15.3c 2017: 17.5c Earnings per share Market price per share 2017: 150c 2018: 180c You are required to: 3.1 Calculate the current and acid-test ratios for 2018 and 2017 and comment. [10 marks] 3.2 Calculate three financial structure ratios for 2018 and 2017 and comment. [10 marks] 19 [8 marks] 3.3 Calculate the earnings and dividend yields for 2018. 3.4 Define then discuss why each of this term is important is important to consider when analyzing the financial statements of a company: [6 marks] 3.4.1 Global economy 3.4.2 National economy 3.4.3 The industry The end 20