Question: QUESTION 2 ( 2 0 MARKS ) REQUIRED Use the relevant information provided below to answer the following questions ( with ratios expressed to two
QUESTION MARKS REQUIRED Use the relevant information provided below to answer the following questions with ratios expressed to two decimal places and fully stated eg:; : Note: Use the formulas provided in the formula sheet only that appear after QUESTION Is the company generating a satisfactory return on its own and borrowed capital? Motivate your answer with the use of a relevant ratio. marks Will the suppliers of borrowed funds have any concerns related to the risk and debt exposure of the company? Calculate TWO appropriate ratios to support your answer. marks Would the shareholders be satisfied with the return on their investments? Motivate your answer with the relevant calculations. marks Calculate TWO appropriate ratios related to the ability of the company to honour its shortterm obligations and comment on your answers. marks What percentage of the profit after tax has been retained by the company? marks INFORMATION Excerpts of financial statements of Beacon Limited for are as follows: Beacon Limited Statement of Comprehensive Income for the year ended December R Sales all credit Cost of sales Gross profit Operating expenses Operating profit Interest expense Profit before tax Company tax Profit after tax Statement of Changes in Equity the year ended December R Dividends paid Statement of Financial Position as at December R Assets Noncurrent assets Inventory Accounts receivable Cash Equity and liabilities Ordinary share capital Retained earnings Longterm loan Accounts payable Other current liabilities
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