The following data was extracted from the records of DT Ltd on 28 February 2021, the end of their financial year:

R

Share capital (900 000 shares at R2 par value) 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 765 000

Market price of share 270c Dividends per share 65c

Required:

1.1. Calculate and comment on each of 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 Price Earnings (PE) ratio and explain what a low PE ratio could mean.