1. What is the primary objective of financial ratios? (2 Mark)

2. The following 2009 standardised financial statements of Dynamic Trading Ltd are provided to you: (30 Marks)

Statement of financial position
Assets	2009
Property, plant and equipment (PPE) at cost price	192 000
Accumulated depreciation	(22 000)
PPE at carrying value	170 000
Investment in shares	3 000
Non-current assets	173 000
Inventories	30 000
Trade receivables	45 000
Cash and cash equivalents	24 000
Current assets	99 000
Total assets	272 000
Equity and liabilities
Share capital	50 000
Reserves	4 000
Retained earnings	28 000
Ordinary shareholders equity	82 000
Preference shares	28 000
Shareholders equity	110 000
Total equity	110 000
Long-term debt	80 000
Non-current liabilities	80 000
Trade payables	25 000
Bank overdraft	1 000
Tax payable	1 000
Dividends payable	5 000
Short-term loans	50 000
Current liabilities	82 000
Total equity and liabilities	272 000

Statement of comprehensive income	2009
Turnover	150 000
Cost of sales and services rendered	(70 000)
Gross profit	80 000
Operating expenses	(40 000)
Operating income	4 000
Operating profit	44 000
Investment income	2 000
Finance cost	(14 660)
Profit before tax	31 340
Tax	(9 400)
Profit after tax	21 940
Preference share dividends	(2 800)
Attributable earnings	19 140
Ordinary dividends	(10 000)
Retained earnings (for the year)	9 140

Additional information:

• Purchases on credit for the year amount to R50 000.
• Lease payments of R10 000 were made during the year.

You are required to:

Calculate the following ratios and present them in the correct units of measurement:

1. Current ratio
2. Quick ratio