QUESTIONS 2 AND 3 ARE BASED ON THE FOLLOWING INFORMATION: The information provided below was obtained from the accounting records of Russel Limited for the past years: Information extracted from the Statement of Comprehensive Income for the year ended 31 December: 2018 (R) 2017 (R) Sales 3 712 000 2 400 000 Cost of sales (2 560 000) (1 500 000) Gross profit 1152 000 900 000 Operating expenses (582 400) (424 000) Depreciation 60 000 52 000 Other operating expenses 522 400 372 000 Operating profit 569 600 476 000 Interest on mortgage loan (48 000) (144 000) Profit before tax 521 600 332 000 Income tax (180 480) (116 200) Profit after tax 341 120 215 800 Information extracted from the Statement of Financial Position of Russel Limited as at 31 December: 2018 (R) ASSETS Non-current assets 4928 320 2017 (R) 4 888 000 2017 (R) Information extracted from the Statement of Financial Position of Russel Limited as at 31 December: 2018 (R) ASSETS Non-current assets 4 928 320 Fixed assets 4 928 320 Current assets 712 000 Inventories (all trading inventory) 632 000 Trade and other receivables 80 000 Cash and cash equivalents 5 640 320 4 888 000 4 888 000 672 000 500 000 128 000 44 000 5 560 000 EQUITY AND LIABILITIES Equity Ordinary share capital Retained income Non-current liability (Mortgage loan, 12% p.a.) Current liabilities Trade and other payables (all accounts payable) Income tax payable Dividends payable Bank overdraft 2018 (R) 4 875 120 4 360 000 515 120 400 000 365 200 196 000 10 000 152 000 7 200 5 640 320 2017 (R) 3 960 000 3 520 000 440 000 1 200 000 400 000 276 000 12 000 112 000 5 560 000 Additional information * New shares were issued on 01 January 2018. 436 000 shares were in issue during 2018. * Interim and final dividends for the year ended 31 December 2018 amounted to R266 000. * Fixed assets were sold at carrying (book) value during the year for R288 000. Fixed assets were also purchased during the year. * All purchases of inventory are on credit. Total purchases amounted to R2 692 000 for 2018. * Terms to debtors are 30 days. QUESTION 2 (20) REQUIRED Use the information provided above to prepare the Cash Flow Statement of Russel Limited (using the indirect method) for the year ended 31 December 2018. QUESTION 3 (20) REQUIRED 3.1 Use the information provided above to calculate the following ratios for 2018. Where applicable, round off answers to two decimal places. 3.1.1 Inventory turnover 3.1.2 Earnings per share 3.1.3 Debt to assets 3.1.4 Acid test ratio 3.1.5 Accounts payable turnover 3.2 The following ratios have been calculated for 2018 and 2017