QUESTION FOUR

The following balances$/$data was extracted from the accounting records of

Vanilla Essence Ltd on $28$ February $2022,$ the end of their financial year.

Required

$1\mathrm{.}1$ Calculate and comment on the following ratios:

$1\mathrm{.}1\mathrm{.}1$ Current ratio $($last year $2,33$: $1)$

$1\mathrm{.}1\mathrm{.}2$ Acid test ratio $($last year $1\mathrm{.}58$: $1)$

$1\mathrm{.}2$ Calculate the PE $($Price Earnings$)$ ratio and explain what a low PE ratio

might mean.

$1\mathrm{.}3$ Calculate the earnings per share. Will shareholders be happy with this? Why?

$1\mathrm{.}4$ Calculate the market to book ratio and explain the significance of this ratio.

$1\mathrm{.}5$ Calculate and comment on the debt equity ratio.

$1\mathrm{.}6$ What is the cost of holding cash?

$(8)$