QUESTION THREE [25] The condensed and other financial information for Igloo Fashions appear below: Statement of Comprehensive Income for the year ended 31 December 2021 R Sales 803 750 Cost of sales (676 500) Gross profit 127 250 Operating expenses (92 250) Operating profit 35 000 Interest expense (12 250) Profit before tax 22 750 Income tax (9 100) Profit after tax 13 650 Statement of Financial Position as at 31 December 2021 Assets R Non-current assets 146 250 Current assets 327 500 Total assets 473 750 Equity and liabilities Shareholders equity 196 650 Non-current liabilities 128 250 Current liabilities 148 850 Total equity and liabilities 473 750 Note: 1. Current assets (R327 500) include accounts receivable of R168 000, inventories of R75 000 and cash of R84 500. 2. Inventories as at 31 December 2020 amounted to R105 000. 3. Current liabilities comprise accounts payable only. 4. The following ratios were calculated: 2021 2020 Current ratio 2.20:1 1.85:1 Gross margin 15.83% 24.12% 5. All purchases of inventory and sales are on credit. Required: 3.1 Calculate the following ratios (Where applicable, round off answers to two decimal places): 3.1.1 Gross Profit margin (2) 3.1.2 Debtor collection period (2) 3.1.3 Creditor payment period (2) 3.1.4 Inventory turnover (2) 3.1.5 Return on own capital (2) 3.1.6 Acid test ratio (2) 3.1.7 Debt to assets (2) 3.2 Comment on the current ratio. (6) 3.3 Igloo Fashions experienced a drop in gross profit margin in 2021. Provide two possible reasons for the drop in gross profit margin. (5) QUESTION FOUR [25] The following information pertains to Alpha Projects for the quarter ended 31 December: Actual Budgeted October November December R R R Invoices (20% for cash and 80% on credit) 360 000 380 000 400 000 Purchases (10% for cash 90% on credit) 240 000 280 000 320 000 Salaries and wages paid 40 000 60 000 60 000 Cash expenses 24 000 28 000 32 000 Depreciation 2 000 2 000 2 000 Additional Information: 1. It is expected that debtors will settle their accounts as follows: 20% in the month of invoice 70% in the month after the month of invoice, and 5% in the second month after the month of invoice. The remaining 5% is usually written off as bad debts. 2. Trade creditors are paid in the month after the purchases at a discount of 5%. 3. 50% of the salaries and wages are weekly wages. Because wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred. 4. Expenses are paid as they arise. 5. The favourable bank balance on 1 November was R 13 600. Required: Prepare the Cash Budget of Alpha Projects for November and December