QUESTION $4(20$ MARKS$)$

REQUIRED

Use the information provided below to prepare the Cash Flow Statement of Alto Limited for the year ended $31$

December $2022.$

INFORMATION

The following amounts were obtained from the Statement of Comprehensive Income for the year ended $31$

December $2022$ and Statement of Financial Position of Alto Limited as at $31$ December $2022$ and $31$

December $2021$:

$31$ Dec $202231$ Dec $2021$

R R

Sales $11000000$

Cost of sales $6500000$

Depreciation $750000$

Operating profit $1650000$

Interest expense $450000$

Company tax for the year $400000$

Property, plant and equipment $($carrying value$)62500005000000$

Long$-$term investments $350000400000$

Inventories $21500002050000$

Accounts receivable $17000001700000$

Prepaid expenses $20000050000$

Cash and cash equivalents $500000350000$

Ordinary share capital $($All shares issued at R$10$ each$)31000003100000$

Retained earnings $30000002500000$

Non$-$current liabilities $36000003350000$

Accounts payable $1100000200000$

Accrued expenses $10000070000$

Dividends payable $200000250000$

Company tax payable $5000080000$

Note:

$$ Dividends paid and recommended during $2022$ amounted to R$300000.$

$$ All purchases and sales of inventories are on credit.

$$ Some of the investments were redeemed during the financial year ended $31$ December $2022.$

$$ Debtors are granted credit terms of $30$ days.

QUESTION $5(20$ MARKS$)$

REQUIRED

Use the information provided in QUESTION $4$ to answer the following questions:

$5\mathrm{.}1$ Calculate the following ratios $($expressed to two decimal places$)$ for $2022$ only. Note: Use formulas

provided in the formula sheet only $($that appear after QUESTION $5).$

$5\mathrm{.}1\mathrm{.}1$ Gross margin $(2$ marks$)$

$5\mathrm{.}1\mathrm{.}2$ Dividend per share $(2$ marks$)$

$5\mathrm{.}1\mathrm{.}3$ Return on assets $(2$ marks$)$

$5\mathrm{.}1\mathrm{.}4$ Current ratio $(2$ marks$)$

$5\mathrm{.}1\mathrm{.}5$ Acid test ratio $(2$ marks$)$

$5\mathrm{.}1\mathrm{.}6$ Debt to equity $(2$ marks$)$

$5\mathrm{.}1\mathrm{.}7$ Creditor payment period $(2$ marks$)$

$5\mathrm{.}2$ Comment on the following ratios:

$20222021$

$5\mathrm{.}2\mathrm{.}1$ Inventory turnover $3\mathrm{.}10$ times $6\mathrm{.}35$ times $(2$ marks$)$

$5\mathrm{.}2\mathrm{.}2$ Debtors collection period $56\mathrm{.}41$ days $29\mathrm{.}45$ days $(2$ marks$)$

$5\mathrm{.}2\mathrm{.}3$ Return on equity $13\mathrm{.}11\%18\mathrm{.}80\%(2$ marks$)$

END OF PAPER

FORMULA SHEET

Gross profit X $100$

Sales $1$

Profit after tax X $100$

Sales $1$

Operating profit X $100$

Total assets $1$

Profit after tax X $100$

Equity $1$

Current assets

Current liabilities

Current assets $$ Inventory

Current liabilities

Cost of sales

Average inventory

Accounts receivable X $365$

Credit sales $1$

Accounts payable X $365$

Credit purchases $1$

Total debt X $100$

Total assets $1$

Non$-$current debt X $100$

Equity $1$

Operating profit

Interest expense

Profit after tax X $100$

No$.$ of ordinary shares issued $1$

Dividends for the year X $100$

No$.$ of ordinary shares issued $1$

Market price per share

Earnings per share

Earnings per share X $100$

Market price per share $1$

Dividend per share X $100$

Market price per share $1$