Question
QUESTION TWO [25] Purca Limited operates in the manufacturing industry. The company constructs car parts and protective structures for motor vehicles in homes, large offices
QUESTION TWO [25] Purca Limited operates in the manufacturing industry. The company constructs car parts and protective structures for motor vehicles in homes, large offices and factories. The company was established in 1815 by entrepreneur, Sandy Malou. It developed through aggressive marketing and has branches throughout RSA. After a brief listing on the development Capital Market, it obtained a listing on the main board of the JSE Securities Exchange in 2016. The summarised balance sheet and income statement for the financial year ended 30 September 2020 have been obtained for analysis. The dividend paid during the financial year amounted to R50 000. Purca Limiteds Statement of comprehensive income for the year ended 30 September 2021.
2021 2020
Revenue R1 700 000 R1 000 000
Less: Cost of sales R1 000 000 R400 000
Gross profit R 700 000 R600 000
Less: Operating expenses
Selling expense R70 000 R50 000
General and administrative expenses R120 000 R60 000
Lease expense R40 000 R10 000
Depreciation expense R100 000 R50 000
Less: Total operating expense R 330 000 R170 000
Profit from operations (EBIT) R370 000 R430 000
Less: Finance cost R70 000 R120 000
Net profit before tax R 300 000 R 310 000
Less: Income tax expense R90 000 R93 000
Profit for the year R 210 000 R 217 000
Purca Limiteds Statement of financial position as at 30 September 2021
2021 2020
ASSETS
Noncurrent assets
Plant and equipment R1 200 000 R1 050 000
Property and machinery R850 000 R800 000
Furniture and fixtures R300 000 R220 000
Vehicles R100 000 R80 000
Other noncurrent assets R50 000 R50 000
Total gross noncurrent assets (at cost) R2 500 000 R2 200 000
Less: Accumulated depreciation R1 300 000 R1 200 000
R1 200 000 R1 000 000
Current assets Inventory R600 000 R900 000
Trade receivables R400 000 R500 000
Cash R1 000 000 R500 000
R2 000 000 R1 900 000
TOTAL ASSETS R3 200 000 R2 900 000
EQUITY & LIABILITIES
Equity
Share capital R600 000 R600 000
Retained earnings R600 000 R500 000
Total equity R1 200 000 R1 100 000
Noncurrent liabilities
Long-term borrowings R600 000 R400 000
Current liabilities
Trade payables R700 000 R500 000
Short-term borrowing R600 000 R700 000
Accruals R100 000 R200 000
R1 400 000 R1 400 000
Total equity and liabilities R3 200 000 R2 900 000
REQUIRED: Calculate the following ratios for 2021:
2.1 Current ratio (3)
2.2 Quick ratio/acid ratio (3)
2.3 Creditors payment (3)
2.4 Debtors collection (3)
2.5 Stock turnover (3)
2.6 Gross profit margin (2)
2.7 Net profit margin (2)
2.8 Return on assets (2)
2.9 Return in equity (2)
2.10 Return on capital employed (2)
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