REQUIRED

Use the information below to answer the following questions.

$4\mathrm{.}1$ calculate the ratios for $2023$ that reflect each of the following. Note: use the formulas provided in the formula sheet only $($that appear after Question $5).$ Answrs to the ratios must be expressed to two decimal places.

$4\mathrm{.}1\mathrm{.}1$ a measure of profitability by comparing the net income to the sales of the company $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}2$ the amount of time it takes for the clients to settle their debts. $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}3$ the amount of time it takes for the company to pay for its credit purchases $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}4$ a measure of the ability of the company to generate profits from its shareholders investments in the company. $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}5$ a coparison of the company's short$-$term assets to its short$-$term liabilities to establish whether the company will be able to pay its immediate debts $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}6$ the percentage of the company's long$-$term debt to its shareholder's equity $(2$ marks$)$

$4\mathrm{.}2$ Refer to you answersi in question $4\mathrm{.}1$ and comment on the following :

$4\mathrm{.}2\mathrm{.}1$ liquidity of the company $(2$ marks$)$

$4\mathrm{.}2\mathrm{.}2$ management of debtors and creditors $(4$ marks$)$

$4\mathrm{.}2\mathrm{.}3$ return earned by the shareholders on their investments in the company $(2$ marks$)$

INFORMATION

Excerpts of the financial data of Scorpio Limited for $2023$ are as follows:

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2023$

Sales $6500000$

cost of sales $4400000$

Operating profit $664000$

interest expense $88000$

profit before tax $576000$

company tax $155520$

STATEMENT OF FINANCIAL POSITION AS AT $31$

Assets R

non$-$current assets $1960000$

inventories $2600000$

accounts receivable $776000$

cash $368000$

$5704000$

Equity and liabilities

ordinary share capital $2208000$

retained earnings $1632000$

long$-$term loan $840000$

accounts payable $1000000$

Company tax payable $24000$

$5704000$

Additional information

$1.$ all purchases and sales of inventories are on credit.

$2.$ inventories on $31$ december $2022$ amounted to R$2000000.$

$3.$ Credit terms to debtors are $30$ days

$4.$ Credits terms granted by suppliers are $90$ days.