You have been appointed as a junior financial analyst of Santos Limited. The following financial statements...

  

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You have been appointed as a junior financial analyst of Santos Limited. The following financial statements of Santos Limited have been furnished to you for the year ended 31 December 2023. Santos Limited. Statement of Financial position as at 31 December 2023 ASSETS Non-current assets Property, plant and equipment Current assets Inventory-finished goods Inventory-raw materials Trade receivables Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Share capital Retained earnings 2023 R 458 000 458 000 711 600 186 600 118 000 138 000 269 000 1 169 600 918 600 322 000 596 600 2022 R 415 000 415 000 650 200 213 800 160 000 127 400 149 000 1 065 200 715 600 322 000 393 600 Non-current liabilities Long-term loan Current liabilities Trade creditors Bills payable Provisions TOTAL EQUITY AND LIABILITIES Santos Limited Statement of comprehensive income for the year ended 31 December 2023 2023 Rands Revenue (40% of sales are on cash) Cost of sales Gross profit Operating expenses Profit from operations Finance costs Profit before tax Income tax expense Net profit for the year Additional information: . 4 800 4 800 246 200 68 200 142 000 36 000 1 169 600 O O 1 559 800 (?) 539 800 (229 000) 310 800 Interim dividends were R65 000 (2023), and R43 400 (2022). Final dividends were R80 000 (2023) and R98 000 (2022). Number of ordinary shares issued was 43 400 (2022), and no new shares were issued since then. O (20 800) 290 000 A = ? C = ? Ordinary shares are currently trading at R10 per share (2023) and R8 (2022). The following amounts appeared on 31 December 2021: Capital and reserves R557 000. 73 600 73 600 276 000 92 000 142 000 42 000 1 065 200 2022 Rands 1 492 000 Depreciation included in cost of sales and operating expenses was R48 000 (2023), and R46 000 (2022). Cost of materials used was R820 000 (2023), and R840 000 (2022). Dividends declared and paid amounted to: (?) 452 000 (223 600) 228 400 (18 400) 210 000 B = ? D = ? O O O Trade receivables R124 200. Finished goods inventory R203 400. Materials inventory R164 000. Required 1 Calculate the amounts A - D (Income tax expense and Net profit for the year). (4) 2 Calculate the following ratios for the financial year ended 31 December 2023 and 31 December 2022. Briefly comment on these ratios: Round off your final answers to 2 decimal places. (45) .2.1 Net profit margin 2.2 Return on assets. 2.3 Return on average equity 2.4 Gross profit margin 2.5 Debtors' collection period 2.6 Average finished goods inventory turnover 2.7 Earnings per share (EPS) ratio 2.8 Dividend per share (DPS) ratio 2.9 Price- earnings (P/E) ratio 3 By analysing investment ratios for Santos Limited for the years ended 31 December 2023 and 2022, in which year was Santos Limited a good investment? Explain your answer with supporting evidence from investment ratios calculated above. You have been appointed as a junior financial analyst of Santos Limited. The following financial statements of Santos Limited have been furnished to you for the year ended 31 December 2023. Santos Limited. Statement of Financial position as at 31 December 2023 ASSETS Non-current assets Property, plant and equipment Current assets Inventory-finished goods Inventory-raw materials Trade receivables Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Share capital Retained earnings 2023 R 458 000 458 000 711 600 186 600 118 000 138 000 269 000 1 169 600 918 600 322 000 596 600 2022 R 415 000 415 000 650 200 213 800 160 000 127 400 149 000 1 065 200 715 600 322 000 393 600 Non-current liabilities Long-term loan Current liabilities Trade creditors Bills payable Provisions TOTAL EQUITY AND LIABILITIES Santos Limited Statement of comprehensive income for the year ended 31 December 2023 2023 Rands Revenue (40% of sales are on cash) Cost of sales Gross profit Operating expenses Profit from operations Finance costs Profit before tax Income tax expense Net profit for the year Additional information: . 4 800 4 800 246 200 68 200 142 000 36 000 1 169 600 O O 1 559 800 (?) 539 800 (229 000) 310 800 Interim dividends were R65 000 (2023), and R43 400 (2022). Final dividends were R80 000 (2023) and R98 000 (2022). Number of ordinary shares issued was 43 400 (2022), and no new shares were issued since then. O (20 800) 290 000 A = ? C = ? Ordinary shares are currently trading at R10 per share (2023) and R8 (2022). The following amounts appeared on 31 December 2021: Capital and reserves R557 000. 73 600 73 600 276 000 92 000 142 000 42 000 1 065 200 2022 Rands 1 492 000 Depreciation included in cost of sales and operating expenses was R48 000 (2023), and R46 000 (2022). Cost of materials used was R820 000 (2023), and R840 000 (2022). Dividends declared and paid amounted to: (?) 452 000 (223 600) 228 400 (18 400) 210 000 B = ? D = ? O O O Trade receivables R124 200. Finished goods inventory R203 400. Materials inventory R164 000. Required 1 Calculate the amounts A - D (Income tax expense and Net profit for the year). (4) 2 Calculate the following ratios for the financial year ended 31 December 2023 and 31 December 2022. Briefly comment on these ratios: Round off your final answers to 2 decimal places. (45) .2.1 Net profit margin 2.2 Return on assets. 2.3 Return on average equity 2.4 Gross profit margin 2.5 Debtors' collection period 2.6 Average finished goods inventory turnover 2.7 Earnings per share (EPS) ratio 2.8 Dividend per share (DPS) ratio 2.9 Price- earnings (P/E) ratio 3 By analysing investment ratios for Santos Limited for the years ended 31 December 2023 and 2022, in which year was Santos Limited a good investment? Explain your answer with supporting evidence from investment ratios calculated above.

Answer rating: 100% (QA)

To calculate the amounts A D Income tax expense and Net profit for the year we can use the information provided in the Statement of Comprehensive Income A Profit before tax Income tax expense B Gross ... View the full answer