QUESTION 6 XYZ LTD Income statement for the year ended 28 February 20.1 20.2 R R Sales (credit) 360 000 (285 000) 75 000 400 000 (300 000) 80 000 320 000 400 000 (100 000) Cost of sales Opening inventories purchases 290 000 365 000 Less: Closing inventories 0 000) 75 000 (45 000) (10 000) Gross profit Less: Administrative costs Financing cost 100 000 (50 000) (10 000) 20 000 40 000 (15 000) R25 000 Profit before tax (8 000) R12 000 Less: Tax Net profit for the year XYZ LIMITED Statement of changes in equity for the year ended 28 February 20.2 Ordinary share capital 100 000 Accumulated profit 100 000 Total 110 000 Balance on 1 March 20.1 Net profit for the year Dividends Balance on 28 February 20.2 25 000 (5 000) R30 000 25 000 (5 000) R130 000 R100 000 XYZ LIMITED Balance sheet as at 28 February 20.2 20.2 20.3 ASSETS NON-CURRENT ASSETS Property, plant and equipment at carrying amount R 120 000 140 000 120 000 140 000 CURRENT ASSETS inventory Trade and other payables Cash and cash equivalents 221 000 100 000 171 000 800 000 88 000 66 000 25 000 33 000 TOTAL ASSETS 341 000 311 000 EQUITY AND LIABILITIES CAPITAL RESERVES Issued ordinary share capital Accumulated profit 130 000 110 000 100 000 100 000 30 000 10 000 NON-CURRENT LIABILITIES Interest bearing borrowing 100 000 100 000 100 000 100 000 CURRENT LIABILITIES Trade and other payables VAT payable 110 000 101 000 99 000 2 000 110 000 1000 341 000 311 000 TOTAL EQUITY AND LIABILITIES The average market price of the shares during 20.1 and 20.2 was R1,10 and R1,20 respectively, Required: Calculate all the profitability, liquidity and solvency ratios for both years and comment on the financial position and results of the enterprise's activities