QUESTION $3(30$ Marks$)$ You are provided with the financial indicators calculated from the financial statements of Small LTD for the past two years ended $30$ April. The business uses the perpetual inventory system to value stock and a gross profit mark$-$up of $75\%$ on cost$.20222021$ Solvency ratio $3\mathrm{.}0$:$13\mathrm{.}2$:$1$ Current ratio $3\mathrm{.}8$:$13\mathrm{.}1$:$1$ Acid test ratio $0\mathrm{.}6$:$10\mathrm{.}6$:$1$ Rate of stock turnover $34\mathrm{.}1$ Trading stock deficit as a $\%$ of cost of sales $3\%1\%$ Stock holding period $120$ days $90$ days Credit terms granted by creditors $60$ days $60$ days Debtors average collection period $28$ days $35$ days Return on shareholders$$ equity: after tax $16\%18\%$ Return on shareholders$$ equity: before tax $22\%26\%$ Earnings per share $51$ cents $63$ cents Dividend per share $12$ cents $5$ cents Changes in total sales $17\%$ decrease $10\%$ increase Gross profit on cost of sales $75\%67\%$ Gross profit on sales $42\%40\%$ Net profit after tax on sales $11\%14\%$ Operating expenses on sales $37\%30\%$ Operating profit on sales $15\%20\%$ Return on total capital employed $26\%30\%$ Debt$/$equity ratio $0\mathrm{.}6$:$10\mathrm{.}3$:$1$ Interest rate on long term loans $14\%12\%$ Net asset value per share $310$ cents $380$ cents Market price per share $330$ cents $390$ cents Sales R$3154000$ R$3800000$ REQUIRED: Study the financial indicators and then answer the questions which follow. REQUIRED: Explain the answers to each of the following questions and quote the actual ratios $/$ percentages from the above list to support your answers. $3\mathrm{.}1$ Should the directors be satisfied with the liquidity of the business and the control of stock? $(10$ marks$)3\mathrm{.}2$ Should the directors be satisfied with the operating activities as reflected in the Income Statement? $(10$ marks$)3\mathrm{.}3$ Should the shareholders be satisfied with the returns, earnings, dividends and share price? $(10$ marks