QUESTION $2(20$ Marks$)$

REQUIRED

$2\mathrm{.}1$

Calculate the ratios for $2023($expressed to two decimal places$)$ that would reflect each of the following.

Note:

$$ Use the formulas provided in the formula sheet only $($that appear after QUESTION $5).$

$$ Answers to the ratios must be expressed to two decimal places.

$2\mathrm{.}1\mathrm{.}1$ The after$-$tax profit earned by the company as a percentage of its revenue. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}2$ The amount of time it takes for the clients of Orbit Limited to settle their debts. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}3$ The efficiency with which the company used its net assets to generate revenue. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}4$ The efficiency of the company in using its own and borrowed capital to generate profits. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}5$ The return that the shareholders have earned on their investments. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}6$ The allocation of the company$$s profit to each ordinary share in issue. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}7$ The percentage of the total assets that were financed by creditors and lenders instead

of investors. $(2$ marks$)$

$2\mathrm{.}2$

Comment on the following ratios:

$20232022$

$2\mathrm{.}2\mathrm{.}1$ Gross margin $35\%29\%(2$ marks$)$

$2\mathrm{.}2\mathrm{.}2$ Price earnings ratio $6\mathrm{.}98$ times $5\mathrm{.}67$ times $(2$ marks$)$

$2\mathrm{.}2\mathrm{.}3$ Return on assets $39\mathrm{.}47\%30\mathrm{.}21\%(2$ marks$)$

INFORMATION

Excerpts of financial statements of Orbit Limited for $2023$ are as follows:

Statement of Comprehensive Income for the year ended $31$ December $2023$

R

Sales $($all credit$)14400000$

Cost of sales $9360000$

Gross profit $5040000$

Operating profit $2160000$

Interest expense $144000$

Profit before tax $2016000$

Company tax $544320$

Profit after tax $1471680$

Statement of Financial Position as at $31$ December $2023$

R

Assets

Non$-$current assets $2808000$

Inventories $1296000$

Accounts receivable $864000$

Cash $504000$

$5472000$

Equity and liabilities

Ordinary share capital $(600000$ shares in issue$)2880000$

Retained earnings $576000$

Long$-$term loan $1224000$

Accounts payable $792000$

$5472000$