You are provided with the following summarised information relating to Virgo Limited, a wheel caps and rims distributor:

Statement of Financial Position $($balance sheet$)$ as at $31$ December $2019$:

$2019$

R

Assets

Non$-$current assets

$936000$

Cash

$168000$

Inventory

$432000$

Trade debtors

$288000$

TOTAL ASSETS

$1824000$

Equity

Shareholders$$ Equity

$1152000$

Liabilities

Long term loan $(15\%$ p$.$a$.)$

$408000$

Accounts payable

$216000$

Dividends payable

$48000$

TOTAL EQUITY AND LIABILITIES

$1824000$

Statement of Comprehensive Income $($income statement$)$ as at $31$ December $2019$:

$2019$

R

Sales

$4800000$

Less Cost of Sales

$3120000$

Gross Profit

$1680000$

Operating profit

$720000$

Interest expense

$48000$

DIFM YEAR $3$ ACADEMIC AND ASSESSMENT CALENDAR $-$ DISTANCE

REGENT BUSINESS SCHOOL $($RBS$)$JULY $2023$

$28$

Profit before tax

$672000$

Income taxation

$268800$

Net profit for the year

$403200$

Additional Information:

$6.$ All purchases and sales of inventories are on credit. Inventories on $31$ December $2018$ amounted to R$300000.$

$7.$ The authorised share capital consists of $500000$ shares of which $300000$ were issued.

$8.$ Interim dividends paid during the year amounted to R$113280.$

$9.$ The shares of Virgo Limited were trading at $350$ cents per share on the stock$/$securities exchange on $31$ December $2019.$

$10.$ The following ratios are available as at $31$ December $2019$ and $2018$:

$2019$

$2018$

Debtors collection period

$21\mathrm{.}9$ days

$37\mathrm{.}6$ days

Return on equity

$35\%$

$28\%$

Inventory turnover rate

$8$ times

$11\mathrm{.}2$ times

Acid test ratio

$1\mathrm{.}73$:$1$

$1\mathrm{.}42$:$1$

Debt to Equity

$35\mathrm{.}42\%$

$24\mathrm{.}56\%$

Current ratio

$?$

$2\mathrm{.}15$:$1$

Creditors payment period

$?$

$35$ days

Required:

$1\mathrm{.}1$ Use the information provided above to calculate the following ratios for $2018.$ Where applicable, round off answers to two decimal places.

$1\mathrm{.}1\mathrm{.}1$ Turnover to net assets $(3)$

$1\mathrm{.}1\mathrm{.}2$ Creditor payment period $(4)$

$1\mathrm{.}1\mathrm{.}3$ Earnings retention ratio $(2)$

$1\mathrm{.}1\mathrm{.}4$ Return on capital employed $(2)$

$1\mathrm{.}1\mathrm{.}5$ Price earnings ratio $(2)$

$1\mathrm{.}1\mathrm{.}6$ Current ratio $(2)$

Answer rating: 100% (QA)

Okay here are the calculations for the ratios in 2018 111 Turnover to net asset... View the full answer