The following balances/data was extracted from the accounting records of Blueberry Ltd on 31 August 2020, the end of their financial year.

Share capital (900 000 shares issued at R2 each) 1,800,000

Retained income 160 000

Non-Current Assets 1 750 000

Inventories 220 000

Receivables 600 000

Cash/Bank 300 000

Payables 730 000

Loans at 15% p.a. 180 000

Net profit after tax Total earnings 765 000

Market price of share 270c

Dividends per share 65c

Required

1.1 Calculate and comment on the following ratios:

1.1.1 Current ratio (last year 2,33: 1) (3)

1.1.2 Acid test ratio (last year 1.58: 1) (3)

1.2 Calculate the PE (Price Earnings) ratio and explain what a low PE ratio might mean. (3)

1.3 Calculate the earnings per share. Will shareholders be happy with this? Why? (3)

1.4 Calculate the market to book ratio and explain the significance of this ratio. (3)

1.5 Calculate and comment on the debt equity ratio. (2)

1.6 What is the cost of holding cash? (8)