QUESTION 3 REQUIRED Use the information provided below to prepare the Cash Flow Statement of Tempest Limited for the year ended 31 December 2019. INFORMATION TEMPEST LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 Sales Cost of sales Gross profit Operating expenses Selling and administrative expenses (20) Depreciation Operating profit Interest expense Profit before tax Income tax Profit after tax R 2 200 000 (1 300 000) 900 000 (570 000) (420 000) (150 000) 330 000 (90 000) 240 000 (80 000) 160 000 Statement of Financial Position as at 31 December: Assets Non-current assets Plant and equipment Accumulated depreciation Investments Current assets Inventories Accounts receivable. Cash and cash equivalents Total assets Equity and liabilities Equity Ordinary share capital (155 000 shares) Retained earnings Non-current liabilities Current liabilities Accounts payable Dividends payable Income tax payable Total equity and liabilities Note: 2019 (R) 1 320 000 400 000 2 (1 150 000) 70 000 910 000 430 000 380 000 100 000 2 230 000 1 220 000 620 000 600 000 720 000 290 000 240 000 40 000 10 000 2 230 000 Dividends paid and recommended during 2019 amounted to R60 000. All purchases and sales of inventories are on credit. R 2018 (R) 1080 000 2 000 000 (1 000 000) 80 000 830 000 410 000 350 000 70 000 1910 000 1120 000 620 000 500 000 670 000 120 000 54 000 50 000 16 000 1910 000 (20) QUESTION 4 REQUIRED 4.1 Use the information from Question 3 to calculate the following ratios for 2019 (answers expressed to two decimal places): Inventory turnover 4.1.1 4.1.2 Interest cover 4.1.3 Net profit margin 4.1.4 Return on equity 4.1.5 Earnings per share 4.1.6 Dividends per share 4.1.7 Acid test ratio 4.1.8 Debt to assets (20) 4.2 Refer to the ratios calculated in question 4.1 and answer the following questions: 4.2.1 Will the shareholders be satisfied with their return on investment? Explain. 4.2.2 Will the company be able to pay its short-term debts if inventories are not sold? Why? NNNNNNNN (2) (2) (2) (2) (2) (2) (2) (2) (2) (2)