The following information was extracted from the records of Tshabalala Traders Ltd for the year ended 31 December 2019.

	R
Capital 1 January 2019	350 000
DRAWINGS	20000
Sales (70% on credit)	950000
Gross profit	250000
Total Expenses	80000
bank favorable	26000
Net Profit	74000
Trade Creditors	26000
The property, plant equipment	350000
Fixed deposit	20000
inventory	72000
Trade Debtors	80000
Mortage	100000

Additional Information The opening balance of the inventory, debtors, and creditors was R50 000, R60 000 and R30 000 respectively. Assume a 365 day year.

Q.2.1 Calculate the following ratios and explain what each ratio means in relation to the industry average given in brackets. Show your calculations as marks will be awarded for these. Round off to 2 decimal places. Q.2.1.1 Net profit margin (10%). (4) Q.2.1.2 Debt equity ratio (30%). (5) Q.2.1.3 Average creditor's settlement period (60 days). Assume purchases are equal to cost of sales and 60% of all purchases are on credit.

(7) Q.2.1.4 Current ratio (2:1). (6)

Q.2.2 Discuss how the solvency ratio is calculated and what is measured by this ratio.