QUESTION $4(20$ Marks$)$

REQUIRED

$4\mathrm{.}1$ Calculate the following ratios for $2022($expressed to two decimal places$).$ Note: Use the formulas provided in the formula sheet only $($that appear after QUESTION $5).$

$4\mathrm{.}1\mathrm{.}1$ Gross profit margin $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}2$ Net profit margin $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}3$ Inventory turnover $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}4$ Current ratio $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}5$ Acid test ratio $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}6$ Debt$-$equity ratio $(2$ marks$)$

$4\mathrm{.}1\mathrm{.}7$ Dividend yield $(2$ marks$)$

$4\mathrm{.}2$ Comment on the following ratios:

$20222021$

$4\mathrm{.}2\mathrm{.}1$ Debt to asset ratio $27\mathrm{.}26\%40\mathrm{.}34\%(2$ marks$)$

$4\mathrm{.}2\mathrm{.}2$ Debtors collection period $36\mathrm{.}87$ days $25\mathrm{.}62$ days $(2$ marks$)$

$4\mathrm{.}2\mathrm{.}3$ Return on equity $11\mathrm{.}67\%14\mathrm{.}25\%(2$ marks$)$

INFORMATION

Extracts of the financial statements of Spire Limited for $2022$ are given below.

SPIRE LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2022$

R

Sales $2970000$

Cost of sales $1980000$

Operating profit $363000$

Interest expense $33000$

Profit before tax $330000$

Company tax $99000$

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER $2022$

Non$-$current assets $2029000$

Inventories $383000$

Accounts receivable $300000$

Cash $10000$

Ordinary share capital $1500000$

Retained earnings $480000$

Non$-$current liabilities $495000$

Accounts payable $200000$

Bank overdraft $47000$

Additional information

$$ Inventories amounted to R$301000$ on $31$ December $2021.$

$$ Dividends paid during $2022$ amounted to R$187500.$

$$ The authorised share capital consisted of $1000000$ ordinary shares of which $750000$ were issued.

$$ The market price of the share was R$3$ on $31$ December $2022.$

$$ Credit terms to debtors are $30$ days.