Question 5

refer to the Above table

5.1 Calculate the breakeven point for Pearson & Litt for 2019 and 2020.

5.2 Compare the results of the 2019 and 2020 breakeven point and explain why there might be a difference

5.3 The current ratio reflects the relationship between the value of the current assets and the extent of the current liabilities of a business.

5.3.1 Calculate the current ratio for Pearson & Litt for 2019

5.3.2 Explain the results of the currenttest ratio. HINT: Include the minimum ratio recommended for the ratio in your answer

5.4 The gross profit margin indicates how profitable sales have been

5.4.1 Calculate the gross profit margin for Pearson & Litt for 2020

5.4.2 Explain the results of the gross profit margin calculation.

5.5 Financial planning forms an integral part of the strategic planning of a firm

5.5.1 Differentiate between traditional budgeting and zerobase budgeting

5.5.2 Recommend one of these budgeting methods to Pearson & Litt and provide reasons for your recommendation

Consider the info provided below as well as the financial statements and answer the questions that follow Pearson & Litt is a manufacturing company in the Eastern Cape. Their factory manufactures glass wine bottles for the Blue Valley Beer Co. 2019 2020 R15 R19 R6 R7 R650 000 R 855 500 Sales price per unit Variable cost per unit Fixed cost (FC) per annum Fixed cost per unit Current assets Current liabilities Retained profit R3 R4 R450 600 R560 700 R510 000 R21 809 R780 000 R17 600 R 3 100 100 Net Sales R2 900 320 Cost of sales R390 000 R475 000