QUESTION $2(20$ Marks$)$

REQUIRED

$2\mathrm{.}1$ Use the information provided below to calculate the ratios for $2022($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 $5).$

$2\mathrm{.}1\mathrm{.}1$ The efficiency with which the company can produce and sell its products before

extraneous costs are deducted. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}2$ The amount of time taken by the company to pay its trade debts. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}3$ A measurement of the ability of management to use the company$$s net assets to generate

sales revenue. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}4$ The amount of profit that the company generates in relation to its equity and borrowed

capital. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}5$ The portion of the company's profit that is allocated to each outstanding ordinary share. $(2$ marks$)$

$2\mathrm{.}1\mathrm{.}6$ The percentage of the profit that has been put back into the company. $(2$ marks$)$

$2\mathrm{.}2$ Comment on the following ratios by stating TWO $(2)$ significant points in each case:

$20222021$

$2\mathrm{.}2\mathrm{.}1$ Profit margin $($Net profit margin$)10\mathrm{.}27\%7\mathrm{.}85\%(2$ marks$)$

$2\mathrm{.}2\mathrm{.}2$ Price earnings ratio $7\mathrm{.}25$ times $5\mathrm{.}32$ times $(2$ marks$)$

$2\mathrm{.}2\mathrm{.}3$ Return on assets $42\mathrm{.}86\%33\mathrm{.}25\%(2$ marks$)$

$2\mathrm{.}2\mathrm{.}4$ Debt to assets $46\mathrm{.}43\%55\mathrm{.}67\%(2$ marks$)$

INFORMATION

Excerpts of the financial data of Premier Limited for $2022$ are as follows:

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2022$

R

Sales $7500000$

Cost of sales $4800000$

Operating profit $1200000$

Interest expense $100000$

Profit before tax $1100000$

Company tax $330000$

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER $2022$

R

Assets

Non$-$current assets $1400000$

Inventories $650000$

Accounts receivable $450000$

Cash $300000$

$2800000$

Equity and liabilities

Ordinary share capital $(500000$ shares$)1200000$

Retained earnings $300000$

Long$-$term loan $600000$

Accounts payable $500000$

Dividends payable $200000$

$2800000$

Additional information

$1.$ All purchases and sales of inventory are on credit.

$2.$ Inventories amounted to R$550000$ on $31$ December $2021.$

$3.$ Interim dividends paid on $10$ July $2022$ amounted to R$108000$