QUESTION 4 (20 Marks) REQUIRED 4.1 Use the information provided below to calculate the following ratios for the financial year ended 31 December 2019. (Where applicable, express answers to two decimal places.) 4.1.1 Gross margin (2 marks) 4.1.2 Current ratio (2 marks) 4.1.3 Return on equity (2 marks) 4.1.4 Inventory turnover (2 marks) 4.1.5 Debt to assets (2 marks) (2 marks) 4.1.6 Earnings per share 4.1.7 Debtors collection period (2 marks) 4.2 Comment on the following ratios that have been calculated for Mersat Limited. Provide two significant comments for each Ratio 2019 2018 4.2.1 Return on assets 23.15% 20.25% (2 marks) 422 Creditors payment period 68.32 days 59.56 days (2 marks) 4.2.3 Acid test ratio 2.36:1 0.87:1 (2 marks) INFORMATION Excerpts of the financial data of Mersat Limited for 2019 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 Sales Cost of sales Operating profit Interest expense Profit before tax Profit after tax R 6 600 000 4614 000 1 446 000 240 000 1 206 000 868 320 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 R ASSETS Non-current assets Inventories Accounts receivable Cash 3 840 000 342 000 1 440 000 624 000 6 246 000 EQUITY AND LIABILITIES Ordinary share capital Retained earnings Long-term loan Accounts payable 600 000 516 000 4254 000 876 000 6246 000 Additional information 1. Inventories on 31 December 2018 amounted to R276 000. 2 All purchases and sales of inventory are on credit. 250 000 ordinary shares have been issued by the company. The credit terms offered by suppliers are 60 days. 3. 4. QUESTION 4 (20 Marks) REQUIRED 4.1 Use the information provided below to calculate the following ratios for the financial year ended 31 December 2019. (Where applicable, express answers to two decimal places.) 4.1.1 Gross margin (2 marks) 4.1.2 Current ratio (2 marks) 4.1.3 Return on equity (2 marks) 4.1.4 Inventory turnover (2 marks) 4.1.5 Debt to assets (2 marks) (2 marks) 4.1.6 Earnings per share 4.1.7 Debtors collection period (2 marks) 4.2 Comment on the following ratios that have been calculated for Mersat Limited. Provide two significant comments for each Ratio 2019 2018 4.2.1 Return on assets 23.15% 20.25% (2 marks) 422 Creditors payment period 68.32 days 59.56 days (2 marks) 4.2.3 Acid test ratio 2.36:1 0.87:1 (2 marks) INFORMATION Excerpts of the financial data of Mersat Limited for 2019 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 Sales Cost of sales Operating profit Interest expense Profit before tax Profit after tax R 6 600 000 4614 000 1 446 000 240 000 1 206 000 868 320 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 R ASSETS Non-current assets Inventories Accounts receivable Cash 3 840 000 342 000 1 440 000 624 000 6 246 000 EQUITY AND LIABILITIES Ordinary share capital Retained earnings Long-term loan Accounts payable 600 000 516 000 4254 000 876 000 6246 000 Additional information 1. Inventories on 31 December 2018 amounted to R276 000. 2 All purchases and sales of inventory are on credit. 250 000 ordinary shares have been issued by the company. The credit terms offered by suppliers are 60 days. 3. 4
