The financial manager of Wani Ltd prepared the following financial information: WANI LTD EXTRACT OF STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021

R Sales (all credit) 2 200 000 Cost of sales 1 000 000 Operating profit 600 000 Profit after tax 350 000

WANI LTD EXTRACT OF STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021

2021 (R) 2020 (R) Non-current assets 1 700 000 1 400 000 Inventories 85 000 75 000 Trade and other receivables(Accounts receivable only)

130 000 115 000

Cash and cash equivalents 80 000 100 000 Shareholders equity 1 250 000 950 000 Non-current liabilities 600 000 475 000 Current liabilities 145 000 265 000

Additional information: The authorised share capital of the company consists of 800 000 ordinary shares of which 500 000 shares have been issued.

Required: 2.1 Calculate each of the following ratios for 2021 (answers expressed to two decimal places): 2.1.1 Operating margin (3) 2.1.2 Debt to equity (3) 2.1.3 Debtors collection period (3) 2.2 Comment on the liquidity position of the company over the two-year period (2020-2021). Use two relevant ratios to motivate your answer. (7) 2.3 Use a relevant ratio to comment on the effectiveness with which the company has employed inventories during 2021. (4) 2.4 As a shareholder, would you be satisfied with the return on your investment in the company? Motivate your answer with an appropriate ratio. (5)