QUESTION TWO [25] The following information has been extracted from the books of DC Enterprises (Pty) Ltd.

DC ENTERPRISES (PTY) Ltd Income statement for the year ended 31 December 2023 Sales (60 % on credit) 18 000 Cost of sales (50 % on credit) 9 000 Depreciation 1 400 Profit before Interest and Tax 7 600 Interest paid 1 200 Taxable profit 6 400 Taxes (30 % + STC) 2 089 Net profit after tax 4 311 Dividends 1 352 Addition to retained profit 2 959

DC ENTERPRISES (PTY) LTD Balance Sheet as at 31 December 2023 2022 2023 Non-current assets Plant and equipment 16 968 16 200 Current assets Stock 5 740 8 450 Debtors 2 230 3 232 Cash 808 494 8 778 12 176 Total assets 25 746 28 376 Owners' equity 3 600 3 600 Share capital 12 859 15 818 16 459 19 418 Non-current liabilities Long term loan 6 800 6 300 Short term loan 750 800 7 550 7 100 Current liabilities Creditors 1 737 1 858 Total equity and liabilities 25 746 28 376

Required: 2.1. Calculate and comment the following liquidity ratios for 2022 and 2023: 2.1.1. Current ratio (4) 2.1.2. Acid test ratio (3)

2.2. Calculate the following activity ratios: 2.2.1. Stock turnover rate (3) 2.2.2. Debtor collection period (3) 2.2.3. Creditor payment period (3)

2.3. Calculate the solvency ratio for 2022 and 2023 (3)

2.4. Calculate the following profitability ratios: 2.4.1. Profitability of the business (3) 2.4.2. Profitability of own capital (3)