The following balances/data was extracted from the accounting records of Chocolate Chips Ltd on 28 February 2022, 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)

1.1.2 Acid test ratio (last year 1.58: 1)

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

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

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

1.5 Calculate and comment on the debt equity ratio.

1.6 What is the cost of holding cash?