QUESTION QUESTION TWO [30] Consider the following statements of financial position for Electric Avenue LTD. a manufacturer of electronic appliances. Electric Avenue LTD Statement of income for the period ended 31 January 2019: 2019 20138 R R Sales(50% on credil 930 000 8250DD Less Cost of sales 632400 585 750 Gross profit 297 600 239 250 Add: Income from other financ al assets 22 800 11 250 Interested 4 800 750 Dividend received 18 000 10 500 Required: 2.1 Calculate the following liquidity ratios for 2019: 2.1.1 Current ratio (3) 2.1.2 Acid test ratio (3) 2.2 Calculate the following activity ratios for 2019 2.2.1 Inventory tumover rate (3) 2.2.2 Debtor collection period (3) 2.3 Calculate the following profitability ratios for 2019. 2.3.1 Proilability of the business 2.3.2 Profitability of own capital (4) 2.3.3 Gross income margin (4) 2.4 From the profitability ratio in question 2.3 above appraiso whether Electric Avenue achieved positive financial leverage effects (6) 250 500 202 200 Less operating expenses Sales expenditure General and admin expenses Depreciation 320 400 158 520 24 450 101 020 32 250 42 750 122 250 37 200 161 880 48 300 Earnings before interest and taxation(EBIT) Loss intorost paid Net earnings before taxation Less incarne tax Earnings after income tax Less Preference dividend 22 500 139 380 37 08D 102 300 10 BDD 16 000 30 300 13 500 18 800 10 800 Distributable Earnings 91 50D E DDD Electric Avenue LTD Balance sheet as at 31 January 2019 2019 R 2018 R 198 000 ASSETS Non-current assete Property, plant and equipment Intangible assets 198 DUD 75 000 75 000 417 000 210 000 210 000 60 000 60 000 487 500 240 DO 120 on . Current assets Inventory Trade and receivables Cash and cash valents 102 BUO 153 000 24 000 990 000 36 300 Total assets 1 114 500 507 OUD 198 000 300 000 Equity and Liabilities Capital and reserves Ordinary share capital Puente chill Shane premium Distributable resovas retained earnings 300 000 50 000 90 000 500 147 DOD 78 000 150 DOD 120 on 1 Non-current liabilities Interest bearing borrowings 15% Current Ilabilities Trade and other payables Shears for livius Bank Overdraft Total equity and liabilities 150 000 273 000 281 750 11250 120 000 196 500 122500 9000 165 000 1 114 500 990 000