QUESTION $3$

$(20$ Marks$)$

REQUIRED

$3\mathrm{.}1$

REQUIRED

Calculate the ratios of both companies that reflect each of the following.

Note: Use the formulas provided in the formula sheet only $($that appear after QUESTION $5).$ Answers to the ratios must be expressed to two decimal places and be fully stated e$.$g$.23\mathrm{.}45\%$; $1\mathrm{.}34$:$1$ etc.

$3\mathrm{.}1\mathrm{.}1$ The percentage of the net profit earned by each company in relation to the revenue generated

$(4$ Marks$)$

$3\mathrm{.}1\mathrm{.}2$ A measure of each company's profit per share

$(4$ Marks$)$

$3\mathrm{.}1\mathrm{.}3$ The ability of each company to settle the short$-$term debt obligations

$(4$ Marks$)$

$3\mathrm{.}1\mathrm{.}4$ The efficiency with which each company uses the assets to generate profit.

$(4$ Marks$)$

$3\mathrm{.}2$

REQUIRED

Refer to your answers in question $3\mathrm{.}1$ and comment on the following:

$3\mathrm{.}2\mathrm{.}1$ The ability of each company to settle the short$-$term debt obligations

$(2$ Marks$)$

$3\mathrm{.}2\mathrm{.}2$ The efficiency with which each company uses the assets to generate profit.

$(2$ Marks$)$

INFORMATION

Extracts of the Statement of Comprehensive Income for the year ended $31$ December $2024$ and Statement of Financial Position as at $31$ December $2024$ are given below for two companies viz. Urban Limited and Metro Limited.

$\backslash$table$[[$Statement of Comprehensive Income for the year ended $31$ December $2024],[,$Urban Limited,Metro Limited$],[,$R$,$R$],[$Sales$,6600000,2160000],[$Cost of sales,$4620000,864000],[$Operating expenses,$510000,57000],[$Operating profit,$1470000,1239000],[$Interest on loan,$174000,75000],[$Profit before tax,$1296000,1164000],[$Company tax,$349920,314280]]$

FORMULA SHEET

$\backslash$table$[[$Gross profit,X$,100,$Profit after tax,X$,100],[$Sales$,,1,$No$.$ of ordinary shares issued,,$1],[$Profit after tax,X$,100,$Dividends for the year,X$,100],[$Sales$,,1,$No$.$ of ordinary shares issued,,$1],[$Cost of sales,Current assets$],[$Average inventory,Current liabilities,$],[$Accounts receivable,$\backslash$table$[[$X$],[365]],$Current assets $-$ Inventory$],[$Credit sales,,$1,$Current liabilities$],[$Accounts payable,X$,365,\backslash$table$[[$Total debt,$x,100],[$Total assets,,$1]]],[$Credit purchases,,$1],[$Operating profit,X$,100,$Non$-$current debt,X$,100],[$Total assets,,$1,$Equity,,$1],[$Profit after tax,X$,100,$Operating profit Interest expense$],[$Equity$,,1]]$