QUESTION 3 (20 Marks) REQUIRED 3.1 Use the information provided below to calculate the following ratios. Where applicable, round off answers to two decimal places. 3.1.1 Inventory tumover (2 marks) 3.1.2 Interest cover (2 marks) 3.1.3 Gross profit margin (2 marks) 3.1.4 Return on equity (2 marks) 3.1.5 Current ratio (2 marks) 3.1.6 Acid test ratio (2 marks) 3.1.7 Debl-equity ratio (2 marks) 3.2 Refer to question 3.1.6 and comment on the acid test ratio which was 1.09:1 in (4 marks) 2018 Suggest TWO (2) ways in which the company can improve its average collection (2 marks) period 3.3 ovic Business Finance New.prt.pdf INFORMATION SPENCER LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 R Sales (all credit) 803 000 Cost of sales (676 000) Gross profit 127 000 Operating expenses (92 000) Operating profit 35 000 Interest expense (12 000) Profit before tax 23 000 Income tax (6 900) Profit after tax 16 100 R 146 000 328 000 474000 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 Assets Non-current assets Current assets Total assets Equity and liabilities Shareholders' equity Non-current liabilities Current liabilities Total equity and liabilities 196 000 128 000 150 000 474 000 Note . Current assets as at 31 December 2019 include inventories of R72 000. . Inventories as at 31 December 2018 amounted to R58 000. QUESTION 3 (20 Marks) REQUIRED 3.1 Use the information provided below to calculate the following ratios. Where applicable, round off answers to two decimal places. 3.1.1 Inventory tumover (2 marks) 3.1.2 Interest cover (2 marks) 3.1.3 Gross profit margin (2 marks) 3.1.4 Return on equity (2 marks) 3.1.5 Current ratio (2 marks) 3.1.6 Acid test ratio (2 marks) 3.1.7 Debl-equity ratio (2 marks) 3.2 Refer to question 3.1.6 and comment on the acid test ratio which was 1.09:1 in (4 marks) 2018 Suggest TWO (2) ways in which the company can improve its average collection (2 marks) period 3.3 ovic Business Finance New.prt.pdf INFORMATION SPENCER LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 R Sales (all credit) 803 000 Cost of sales (676 000) Gross profit 127 000 Operating expenses (92 000) Operating profit 35 000 Interest expense (12 000) Profit before tax 23 000 Income tax (6 900) Profit after tax 16 100 R 146 000 328 000 474000 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 Assets Non-current assets Current assets Total assets Equity and liabilities Shareholders' equity Non-current liabilities Current liabilities Total equity and liabilities 196 000 128 000 150 000 474 000 Note . Current assets as at 31 December 2019 include inventories of R72 000. . Inventories as at 31 December 2018 amounted to R58 000