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QUESTION TWO [25] Extracts of the Statement of Comprehensive income for the year ended 31 December 2021 and the Statement of Financial Position as at

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QUESTION TWO [25] Extracts of the Statement of Comprehensive income for the year ended 31 December 2021 and the Statement of Financial Position as at 31 Decernber 2021 are given below for two companies viz. Ash Limited and Burton Limited Extract of Statement of Comprehensive income for the year ended 31 December 2021: Extract of Statement of Financial Position as at 31 December 2021: Additional Intomation: - Imventories as at 31 December 2020 ate as follows: Ash Limsed R800 000 Burton Limiled R230 000 - All sales and purchases of imentories are on credt. Extract of Statement of Financial Position as at 31 December 2021: Additional Information: - Inventories as at 31 December 2020 are as follows: Ash Limited R800 000 Burton Limited R230 000 - All sales and purchases of inventories are on credit. Required: Compare the performance of Ash Limited and Burton Limited (both in same industry) with regard to the following ratios and in each case state your observations: 2.1 The ability of each company to repay its short term debts without relying on sale of its inventories. 2.2 The return earned by shareholders on their investment. (5) 2.3 The operational effectiveness of each company before considering interest income, interest expense and income tax. (5) 2.4 The effectiveness with which the goods for sale have been managed. (3) 2.5 An evaluation of each company's performance with regard to the management of its trade creditors. (7)

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