Use the information given below to answer the following questions. Where applicable, express answers to ratios to two decimal places. Will the company be able to fund its short-term obligations if inventories are not sold? Motivate your 2.1 answer. 2.2 The directors are considering financing the expansion of the company by taking out a long-term loan. With the use of the relevant ratios advise whether this would be appropriate for the company. 2.3 Comment on the dividend payout rate of the company. 2.4 Calculate the cost (as a percentage) to Satner Limited of not accepting discounts from creditors in settlement of accounts. 2.5 As a shareholder would you be satisfied with the profitability of the company? Motivate your answer. 2.6 Is the company's collection policy effective? Justify your answer. INFORMATION SATNER LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 R Sales 1 574 800 Cost of sales (812 600) Gross profit 762 200 Operating expenses (420 680) Operating profit 341 520 Interest expense (56 820) Profit before tax 284 700 Company tax (85 410) Net profit after tax 199 290 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER |2021 Assets R Non-current assets 783 000 Current assets: 606 600 Inventories 203 000 Accounts receivable 277 800 Cash and cash equivalents 125 800 Total assets 1 389 600 Equity and liabilities Shareholders' equity 628 900 Non-current liabilities (15%) 378 800 Current liabilities 381 900 Accounts payable 100 800 Other current liabilities 281 100 Total equity and liabilities 1 389 600 Note: 1. Inventories as at 31 December 2020 amounted to R185 000. 2. All purchases and sales are on credit. 3. Credit terms to debtors are 30 days. 4. Credit terms of 3/10 net 90 days are granted by creditors. 5. Dividends for the year amounted to R139 503.
Use the information given below to answer the following questions. Where applicable, express answers to ratios to two decimal places. Will the company be able to fund its short-term obligations if inventories are not sold? Motivate your 2.1 answer. 2.2 The directors are considering financing the expansion of the company by taking out a long-term loan. With the use of the relevant ratios advise whether this would be appropriate for the company. 2.3 Comment on the dividend payout rate of the company. 2.4 Calculate the cost (as a percentage) to Satner Limited of not accepting discounts from creditors in settlement of accounts. 2.5 As a shareholder would you be satisfied with the profitability of the company? Motivate your answer. 2.6 Is the company's collection policy effective? Justify your answer. INFORMATION SATNER LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 R Sales 1 574 800 Cost of sales (812 600) Gross profit 762 200 Operating expenses (420 680) Operating profit 341 520 Interest expense (56 820) Profit before tax 284 700 Company tax (85 410) Net profit after tax 199 290 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER |2021 Assets R Non-current assets 783 000 Current assets: 606 600 Inventories 203 000 Accounts receivable 277 800 Cash and cash equivalents 125 800 Total assets 1 389 600 Equity and liabilities Shareholders' equity 628 900 Non-current liabilities (15%) 378 800 Current liabilities 381 900 Accounts payable 100 800 Other current liabilities 281 100 Total equity and liabilities 1 389 600 Note: 1. Inventories as at 31 December 2020 amounted to R185 000. 2. All purchases and sales are on credit. 3. Credit terms to debtors are 30 days. 4. Credit terms of 3/10 net 90 days are granted by creditors. 5. Dividends for the year amounted to R139 503.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Good day
Please answer question 2.4., 2.5. and 2.6.
Transcribed Image Text:Use the information given below to answer the following questions. Where applicable, express answers to ratios to two
decimal places.
Will the company be able to fund its short-term obligations if inventories are not sold? Motivate your
2.1
answer.
2.2
The directors are considering financing the expansion of the company by taking out a long-term
loan. With the use of the relevant ratios advise whether this would be appropriate for the company.
2.3
Comment on the dividend payout rate of the company.
2.4
Calculate the cost (as a percentage) to Satner Limited of not accepting discounts from creditors in
settlement of accounts.
2.5
As a shareholder would you be satisfied with the profitability of the company? Motivate your
answer.
2.6
Is the company's collection policy effective? Justify your answer.
INFORMATION
SATNER LIMITED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021
R
Sales
1 574 800
Cost of sales
(812 600)
Gross profit
762 200
Operating expenses
(420 680)
Operating profit
341 520
Interest expense
(56 820)
Profit before tax
284 700
Company tax
(85 410)
Net profit after tax
199 290
Transcribed Image Text:STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
|2021
Assets
R
Non-current assets
783 000
Current assets:
606 600
Inventories
203 000
Accounts receivable
277 800
Cash and cash equivalents
125 800
Total assets
1 389 600
Equity and liabilities
Shareholders' equity
628 900
Non-current liabilities (15%)
378 800
Current liabilities
381 900
Accounts payable
100 800
Other current liabilities
281 100
Total equity and liabilities
1 389 600
Note:
1.
Inventories as at 31 December 2020 amounted to R185 000.
2.
All purchases and sales are on credit.
3.
Credit terms to debtors are 30 days.
4.
Credit terms of 3/10 net 90 days are granted by creditors.
5.
Dividends for the year amounted to R139 503.
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