QUESTION 2 REQUIRED Use the information provided below to answer the following questions (with ratios expressed to two decimal places). Use only the formulas provided in the formula sheet that appear after Question 5. 2.1 2.2 2.3 2.4 2.5 2.6 Will the company be able to settle its short-term obligations with its short-term assets? Motivate your answer with the use of a ratio. The directors are considering financing the expansion of the company by taking out a long-term loan. With the use of TWO (2) relevant ratios advise whether this would be appropriate for the company. Comment on the dividend payout rate of the company. Calculate the cost (as a percentage) to Kiara Limited of not accepting discounts from creditors in settlement of accounts. As a shareholder would you be satisfied with the profitability of the company? Motivate your answer with the relevant ratio. Is the company's debt payment period appropriate? Justify your answer by using an appropriate ratio. INFORMATION The condensed information given below was obtained from the books of Kiara Limited: KIARA LIMITED (3 marks) (6 marks) (2 marks) (3 marks) (3 marks) (3 marks) STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2024 Sales R Cost of sales 4 200 000 (2 652 000) Gross profit Operating expenses 1 548 000 (798 000) Operating profit Interest income 750 000 60 000 Interest expense Profit before tax (135 000) Company tax 675 000 (182 250) Profit after tax 492 750 KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: 2024 2023 R R ASSETS Property, plant and equipment (cost) 2 490 000 1 620 000 Accumulated depreciation (630 000) (480 000) Long-term investments 660 000 450 000 Inventory 1 050 000 1 290 000 Accounts receivable 1 230 000 900 000 Company tax paid in advance 30 000 0 Bank 750 000 660 000 5 580 000 4 440 000 EQUITY AND LIABILITIES Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.