QUESTION 4 (20 Marks) STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 R 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) ASSETS Non-current assets Inventories Accounts receivable 4.1.2 Current ratio (2 marks) 3 840 000 342 000 1 440 000 624 000 6 246 000 Cash 4.1.3 Return on equity (2 marks) 4.1.4 Inventory turnover (2 marks) 4.1.5 Debt to assets (2 marks) EQUITY AND LIABILITIES Ordinary share capital Retained earnings Long-term loan 4.1.6 Earnings per share (2 marks) 4.1.7 Debtors collection period (2 marks) 600 000 516 000 4254 000 876 000 6 246 000 Accounts payable 4.2 Comment on the following ratios that have been calculated for Mersat Limited. Provide two significant Ratio 2019 2018 comments for Return on assets 23.15% 20.25% each. Creditors payment period 68.32 days 59.56 days 4.2.1 12 marks) 2.36:1 0.87:1 (2 marks) 4.2.3 (2 marks) 4.2.2 Acid test ratio Additional information 1. Inventories on 31 December 2018 amounted to R276 000. 2. All purchases and sales of inventory are on credit. 3. 250 000 ordinary shares have been issued by the company. 4 The credit terms offered by suppliers are 60 days. 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 R 6 600 000 4614 000 1 446 000 240 000 1 206 000 868 320 Interest expense Profit before tax Profit after tax