QUESTION 1 (25 Marks ) REQUIRED Study the information provided below and answer the following questions : 1.1 Explain the changes that possibly took place during 2019 in respect of: 1.1.1 Financing activities (2 marks ) 1.1.2 Investing activities (4 marks ) 1.2 Calculate the distribution costs for 2019 (2 marks ) 1.3 Of what significance is the statement of comprehensive income to potential investors ? (2 marks ) 1.4 If the interest rate on loans was 15% whilst the return on assets was 22 %, how are the shareholders likely to interpret this ? (3 marks ) 1.5 Critically assess the performance of the company from the information provided (12 marks ) INFORMATION The statements of comprehensive income of Hemrock Ltd for 2019 and 2018 are provided below : HEMROCK LTD STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER : 2019 (R) 2018 (R) Sales 4 500 000 4 000 000 Cost of sales (1 950 000 ) (1 700 000 ) Gross profit 2 550 000 2 300 000 Other operating income 150 000 140 000 Distribution costs Administrative expenses (600 000 ) 550 000 ) Operating profit 600 000 540 000 Interest income 5 500 2 700 Interest expense (4 350 ) (8 800 ) Profit before tax 601 150 533 900 Company tax (180 345 ) (160 170 ) Profit after tax 420 805 373 730