QUESTION ONE [25]

The following data was extracted from the records of DT Ltd on 28 February 2021, the end of their financial year: R Share capital (900 000 shares at R2 par value) 1 800 000 Retained income 160 000 Non-Current Assets 1 750 000 Inventories 220 000 Receivables 600 000 Cash/Bank 300 000 Payables 730 000 Loans at 15% p.a. 180 000 Net profit after tax 765 000 Market price of share 270c Dividends per share 65c Required:

1.1. Calculate and comment on each of the following ratios:

1.1.1. Current ratio (last year 2.33 : 1) (4)

1.1.2.Acid test ratio (last year 1.58 : 1) (4)

1.2. Calculate the Price Earnings (PE) ratio and explain what a low PE ratio could mean. (4)

1.3. Calculate the earnings per share. Will shareholders be happy with this? Why? (4)

1.4. Calculate the market to book ratio and explain the significance of this ratio. (4)

1.5. Calculate and comment on the debt equity ratio. (3)

1.6. Calculate the retained income for the year. (2)

Acid test ratio (last year 1.58 : 1) (4) 1.2. Calculate the Price Earnings (PE) ratio and explain what a low PE ratio could mean. (4) 1.3. Calculate the earnings per share. Will shareholders be happy with this? Why? (4) 1.4. Calculate the market to book ratio and explain the significance of this ratio. (4) 1.5. Calculate and comment on the debt equity ratio. (3) 1.6. Calculate the retained income for the year. (2)