REQUIRED

Use the information provided below to answer the following questions.

Note: Use the formulas provided in the formula sheet only $($that appear after QUESTION $5).$ Answers to the

ratios must be expressed to two decimal places.

$4\mathrm{.}1$ What percentage of the sales is made up of net income? $(2$ marks$)$

$4\mathrm{.}2$ Calculate TWO $(2)$ appropriate liquidity ratios and comment on the liquidity of the

company. $(6$ marks$)$

$4\mathrm{.}3$ Calculate the relevant ratios and comment on the effectiveness with which the company

has employed the debtors and creditors. $(6$ marks$)$

$4\mathrm{.}4$ Calculate TWO $(2)$ appropriate ratios that would be used to assess the profitability of the

company by examining the income from operations and the after$-$tax returns earned.

Comment on your calculations. $(6$ marks$)$

INFORMATION

Excerpts of financial data of Markram Limited for $2022$ are as follows:

Statement of Comprehensive Income for the year ended $31$ December $2022$

R

Sales $6000000$

Cost of sales $4000000$

Opening inventory $200000$

Purchases $?$

Closing inventory $500000$

Operating profit $1200000$

Interest expense $200000$

Profit before tax $1000000$

Company tax $270000$

Statement of Financial Position as at $31$ December $2022$

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Non$-$current assets $3500000$

Inventories $500000$

Accounts receivable $1400000$

Cash $2000$

Bank overdraft $30000$

Ordinary share capital $940000$

Retained earnings $132000$

Long$-$term loan $3600000$

Accounts payable $700000$

Additional information

$$ Ninety percent $(90\%)$ of the sales is on credit.

$$ All purchases are on credit.

$$ Credit terms to debtors are $60$ days and credit terms from suppliers are $90$ days.