QUESTION 2 (20 Marks) REQUIRED Use the information provided in QUESTION 1 to answer the following questions:

2.1 Calculate the ratios for 2021 (expressed to two decimal places) that reflect each of the following:

2.1.1 A measure of profitability by comparing the net income and the sales of the company. (2)

2.1.2 The amount of time it takes for clients to settle their debts. (2)

2.1.3 The efficiency of the company in using its own and borrowed capital to generate profits. (2)

2.1.4 A measure of the ability of the company to generate profits from its shareholders investments in the company. (2)

2.1.5 A comparison of the company's short-term assets except inventories to its short-term liabilities to see if the company will have enough cash to pay its immediate liabilities. (2) 2.1.6 The percentage of the company's long-term debt to its shareholder's equity. (2)

2.2 Refer to your answers in question 2.1 and answer the following questions:

2.2.1 Comment on the liquidity of the company. (2)

2.2.2 Would it be prudent to finance an expansion programme by increasing the borrowed capital? Motivate your answer with the use of TWO (2) relevant ratios. (4)

2.2.3 Comment on the return earned by shareholders on their investment in the company. (2)