te Chips

QUESTION ONE {25 marks} The following balances/data was extracted from the accounting records of Chocolate Chips 1.2 1.3 1.4 1.5 1.6 Ltd on 28 February 2022, the end of their financial year. Share capital (900 000 shares issued at R2 each) Retained income Non-Current Assets Inventories Receivables Cash/Bank Payables Loans at 15% p.a. Net profit after tax Total earnings Market price of share Dividends per share Required Calculate and comment on the following ratios: 1 .1.1 Current ratio (last year 2,33: 1) 1 .1.2 Acid test ratio (last year 1.58: 1) 160 ooo 1 750 ooo 220 ooo 600 ooo 300 ooo 730 ooo 180 ooo 765 ooo 270c 65c Calculate the PE (Price Earnings) ratio and explain what a low PE ratio might mean. Calculate the earnings per share. Will shareholders be happy with this? Why? Calculate the market to book ratio and explain the significance of this ratio. Calculate and comment on the debt equity ratio. What is the cost of holding cash? (3) (3) (3) (3) (3) (2) (8)