QUESTION $2(25$ Marks$)$

BMG Ltd is a manufacturer of auto components for the South African motor industry. You are tasked with analyzing the

performance of the firm over the latest two years. A simplified statement of comprehensive income and statement of

financial position are provided below.

BMG Ltd Statement of Comprehensive Income for the year ended $28$ February $2023$

$20232022$

Sales $780000624000$

Cost of Sales $(440000)(405600)$

Gross Profit $340000218400$

Operating Costs $(176880)(149760)$

Operating profit $($PBIT$)16312068640$

Finance Costs $(9920)(7200)$

Profit before tax $15320061440$

Tax $(28\%)(38000)(14000)$

Net Profit after Tax $($NPAT$)11520047440$

BMG Ltd Statement of Financial Position as at $28$ February $2023$

ASSETS

$20232022$

Net Non$-$Current Assets $507700456100$

Current Assets $268100195900$

Inventory $12760082250$

Accounts receivables $11740092050$

Cash and cash equivalents $2310021600$

Total Assets $775800652000$

EQUITY AND LIABILITIES

Equity $462080$

$376000$

Ordinary Share Capital $150000150000$

Retained Profit $312080226000$

Liabilities $313720276000$

Long term debt $132000120000$

Overdraft $3440024000$

Accounts payable $147320132000$

Total Equity and Liabilities $775800652000$

Additional information:

$$ BMG Ltd pays out $60\%$ of its profits as dividends.

$$ Number of shares outstanding $(2022$ and $2023)$: $15000$

$$ Market price per share: R$15\mathrm{.}00(2022)$

R$25\mathrm{.}80(2023)$

Required:

Analyse the profitability and asset management of BMG Ltd for the $2022$ and $2023$ financial years. Your

analysis should include a comparison of relevant ratios in $2022$ and $2023.$ Assume $365$ days in a year. The

ratio analysis should include Net Profit Margin, Gross Profit Margin, Return On Assets, Return On Equity,

Inventory Turnover, Accounts Receivable Period, Accounts Payable Period and Total Asset Turnover.

$(25$ Marks