Use the information provided below to answer the following questions. Calculate the ratios for 2021 (expressed to two decimal places) that would reflect each of the following: 5.1 The percentage of profit on sales that the company produced from its operations prior to considering finance charges and taxes.(2 marks) 5.1.2 The amount of time it takes for the clients of Supreme Limited to settle their debts. (2 marks) 5.1.3 The efficiency with which the company used its net assets to produce revenue. (2 marks) 5.1.4 The efficiency of the company in using all its capital to generate profits. (2 marks) 5.1.5 The proportion of the profit after tax that is kept back in the company as retained earnings. (2 marks) 5.1.6 A measure of the companys ability to pay its short-term debts within one year. (2 marks) 5.1.7 A measure of the proportion of the total assets that are financed by creditors instead of investors. (2 marks)

Comment on your answers in questions 5.1.4, 5.1.5 and 5.1.6 above. (6 marks)

INFORMATION The following information was extracted from the accounting records of Supreme Limited for the financial years ended 31 December 2021 and 2020:

SUPREME LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: 2021 2020 R000 R000 ASSETS Property, plant and equipment 221 034 124 665 Investments 10 200 26 250 Inventories 37 671 47 364 Accounts receivable 38 829 44 034 Cash 7 899 2 820 EQUITY AND LIABILITIES Share capital 102 332 73 500 Retained income 74 464 65 532 Loan (18%) 92 802 76 248 Accounts payable 46 035 29 853

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER: 2021 2020 Sales 216 486 143 499 Cost of sales 120 270 72 090 Operating profit 65 802 46 581 Investment income 4 116 6 237 Interest expense 17 634 12 198 Profit before tax 52 284 40 620 Net profit 36 599 28 434

Note: 1. All sales are on credit. 2. Dividends for the year ended 31 December 2021 R22 232