You are required to:

1. Accounting places a financial measurement on the decisions which is transmitted through the financial report(ing) to interested parties who use the financial information to make economic decisions. Name and describe only five (5) users of financial reports. (7)

2. What is the main objective of a business? (2)

3. Calculate the following ratios and interpret the calculated ratios for Thuthuka Traders in relation to the industry averages (in both years). Assume 365 days in a year. NB: Any two in each group

1. Profitability ratios (9)
2. Liquidity ratios; and (10)
3. Solvency ratios. (9)

4. Briefly explain the following terms of the fundamental qualitative characteristic of useful financial information:
   1. Faithful representation (2)
   2. Relevance (2)

AutoSave Off 2 2AFA 102... - Search ANDILE KWAZI BUTHELEZI AK File Home Insert Design Layout References Mailings Review View Developer Help Share Comments Question 3 43 Marks: 60 Minutes Thuthu and Ka are in partnership trading as Thuthuka Trader. Their financial year end on the 28 February each year. Thuthuka Trader Abstract from the financial statement as at 28 February 2021 Industry averages as at 28 February 2021 Return on equity Return on total assets Gross profit percentage Profit margin Financial leverage Current ratio Acid test ratio Trade receivables collection period Trade payables settlement period Inventory turnover rate Inventory-holding period Debt-equity ratio Times interest earned ratio 2021 2020 R 18.30% 15,80% 53,55% 53,69% 1.16 2,53:1 1,96:1 80,04days 85,11 days 6.01 times 105,20 days 57% 13,24 times R 225 000 150 000 225 000 150 000 Capital accounts Thuthu. Ka Current accounts Thuthu. (C) ) Ka (CT) Long-term borrowing Land and buildings at cost price Machinery and equipment at cost Accumulated depreciation Investment at fair value Inventory - 28 February 2021 Trade receivables Cash in bank Trade payables Bank overdraft Sales Purchases Administrative expenses Interest on long-term borrowing Profit for the year 26 400 21 600 70 000 240 000 177 000 43 000 35 000 25 000 36 000 47 000 24 000 9 000 6 000 100 000 276 000 191 000 49 000 35 000 21 000 37 000 NB: Total equity = Capital Thuthu + Capital Ka + Current Thuthu + Current Ka Additional information 34 000 234 000 74 500 27 500 a) All sales and purchases are on credit. The trade receivables and trade payables, at the beginning of the 2020 financial year amounted to R27 500 and R29 000 respectively 179 800 57 400 9 250 12 000 91 150 b) Inventory at the beginning of the 2020 financial year amounted to R 15 000 8 400 123 600 Page 6 of 12 2289 words m English (Zimbabwe FO a T Focus B 3 1 + 80%