QUESTION FOUR [30] The following information from Incomplete Ltds 2020 standardised statement of financial position and statement of comprehensive income are provided to you: ADVANCED DIPLOMA IN FINANCIAL MANAGEMENT ACADEMIC AND ASSESSMENT CALENDAR DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2022 13 Statement of financial position 2020 TOTAL ASSETS Property, plant and equipment (PPE) at cost price 320 000 Accumulated depreciation (239 000) PPE at carrying value 81 000 Goodwill 60 000 Investment in shares 8 000 Non-current assets 149 000 Inventories 43 000 Trade receivables 32 000 Cash and cash equivalents 24 000 Current assets 99 000 Total assets 248 000 EQUITY AND LIABILITIES Share capital 100 000 Reserves 10 000 Retained earnings 11 200 Ordinary shareholders equity 121 200 Preference shares 30 000 Shareholders equity 151 200 Non-controlling interest 22 000 Total equity 173 200 Long-term debentures 30 000 Long-term loan 4 000 Non-current liabilities 34 000 Trade payables 20 000 Other payables 16 800 Tax payable 4 000 Current liabilities 40 800 Total equity and liabilities 248 000 ADVANCED DIPLOMA IN FINANCIAL MANAGEMENT ACADEMIC AND ASSESSMENT CALENDAR DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2022 14 Statement of comprehensive income 2020 Turnover 274 000 Cost of sales and services rendered (207 500) Gross profit 66 500 Operating expenses (26 500) Operating income 1 500 Operating profit 41 500 Investment income 4 000 Finance cost (6 000) Profit before tax 39 500 Tax (16 700) Profit after tax 22 800 Extract from Statement of Changes in Equity Retained profit Opening balance XXX Profit for the year 22 800 Non-controlling interest (1 000) Preference share dividends (2 400) Attributable earnings 19 400 Ordinary dividends (3 600) Retained earnings (for the year) 15 800 Closing balance XXX Additional information: Purchases on credit for the year amount to R80 000. Lease payments of R10 000 were made during the year. The company has 10 000 ordinary shares in issue. The market price per share amounts to R10. ADVANCED DIPLOMA IN FINANCIAL MANAGEMENT ACADEMIC AND ASSESSMENT CALENDAR DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2022 15 Required: Calculate the following Profitability ratios for Incomplete Ltd: 4.1 Return on Total Assets (2) 4.2 Return on Equity (2) 4.3 Gross margin on sales (2) 4.4 Profit margin on sales (2) 4.5 Comment on the ability of a company to generate income (profit) (4) Calculate the following liquidity ratios: 4.6 Current ratio (2) 4.7 Quick ratio (2) 4.8 Cash ratio (2) Calculate the following asset management ratios for Incomplete Ltd: 4.9 Inventory turnover (2) 4.10 Debtors collection period (2) 4. 11 Creditors payment period (2) Calculate the following investment ratios for Incomplete Ltd: 4.12 Earnings per share (EPS) (2) 4.13 Dividend per share (DPS) (2) 4.14 Price to earnings ratio (P/E) (2)