QUESTION 4 (20 Marks) REQUIRED Use the information provided below to answer the following questions. Note: Use the formulas provided in the formula sheet only (that appear after QUESTION 5). The answers to the ratios must be expressed to two decimal places. 4.1 Calculate the ratio that determines the company's profitability after the cost of sales have been deducted from the sales. (2 marks) 4.2 Compare the earnings per share with the dividend per share for 2023. What conclusions can you draw from this comparison? (4 marks) 4.3 Will the shareholders be satisfied with the return earned by the company on the own capital? Motivate your answer by using an appropriate ratio. (3 marks) 4.4 Comment on the ability of the company to settle its short-term obligations with just its most liquid current assets. Use a ratio to support your answer. (3 marks) 4.5 Comment on the effectiveness with which the company has managed the inventory, debtors and creditors. Support your answer by calculating the relevant ratios. (8 marks) INFORMATION Excerpts of the financial data of Daiken Limited for 2023 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 Sales Cost of sales Opening inventory Purchases Closing inventory Gross profit Operating profit Interest expense Profit before tax Company tax R 2 200 000 1 538 000 92 000 ? 114 000 ? 482 000 80 000 402 000 108 540 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 Non-current assets Inventories Accounts receivable Cash Ordinary share capital Retained earnings Long-term loan Accounts payable Company tax payable Dividends payable Additional information All purchases and sales of inventories are on credit. ☐ There were 450 000 ordinary shares in issue during 2023. ◉ An interim dividend of R50 000 was paid on 30 June 2023. ◉ Credit terms to debtors were 30 days whilst creditors have granted credit terms of 60 days. ☐ Inventories were replaced after approximately 30 days during 2022. R 1 280 000 ? 680 000 8 000 900 000 172 000 658 000 220 000 72 000 60 000
QUESTION 4 (20 Marks) REQUIRED Use the information provided below to answer the following questions. Note: Use the formulas provided in the formula sheet only (that appear after QUESTION 5). The answers to the ratios must be expressed to two decimal places. 4.1 Calculate the ratio that determines the company's profitability after the cost of sales have been deducted from the sales. (2 marks) 4.2 Compare the earnings per share with the dividend per share for 2023. What conclusions can you draw from this comparison? (4 marks) 4.3 Will the shareholders be satisfied with the return earned by the company on the own capital? Motivate your answer by using an appropriate ratio. (3 marks) 4.4 Comment on the ability of the company to settle its short-term obligations with just its most liquid current assets. Use a ratio to support your answer. (3 marks) 4.5 Comment on the effectiveness with which the company has managed the inventory, debtors and creditors. Support your answer by calculating the relevant ratios. (8 marks) INFORMATION Excerpts of the financial data of Daiken Limited for 2023 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 Sales Cost of sales Opening inventory Purchases Closing inventory Gross profit Operating profit Interest expense Profit before tax Company tax R 2 200 000 1 538 000 92 000 ? 114 000 ? 482 000 80 000 402 000 108 540 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 Non-current assets Inventories Accounts receivable Cash Ordinary share capital Retained earnings Long-term loan Accounts payable Company tax payable Dividends payable Additional information All purchases and sales of inventories are on credit. ☐ There were 450 000 ordinary shares in issue during 2023. ◉ An interim dividend of R50 000 was paid on 30 June 2023. ◉ Credit terms to debtors were 30 days whilst creditors have granted credit terms of 60 days. ☐ Inventories were replaced after approximately 30 days during 2022. R 1 280 000 ? 680 000 8 000 900 000 172 000 658 000 220 000 72 000 60 000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:QUESTION 4
(20 Marks)
REQUIRED
Use the information provided below to answer the following questions. Note: Use the formulas provided in
the formula sheet only (that appear after QUESTION 5). The answers to the ratios must be expressed to two
decimal places.
4.1 Calculate the ratio that determines the company's profitability after the cost of sales have
been deducted from the sales.
(2 marks)
4.2
Compare the earnings per share with the dividend per share for 2023. What conclusions
can you draw from this comparison?
(4 marks)
4.3
Will the shareholders be satisfied with the return earned by the company on the own
capital? Motivate your answer by using an appropriate ratio.
(3 marks)
4.4 Comment on the ability of the company to settle its short-term obligations with just its most
liquid current assets. Use a ratio to support your answer.
(3 marks)
4.5 Comment on the effectiveness with which the company has managed the inventory,
debtors and creditors. Support your answer by calculating the relevant ratios.
(8 marks)
INFORMATION
Excerpts of the financial data of Daiken Limited for 2023 are as follows:
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023
Sales
Cost of sales
Opening inventory
Purchases
Closing inventory
Gross profit
Operating profit
Interest expense
Profit before tax
Company tax
R
2 200 000
1 538 000
92 000
?
114 000
?
482 000
80 000
402 000
108 540
Transcribed Image Text:STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
Non-current assets
Inventories
Accounts receivable
Cash
Ordinary share capital
Retained earnings
Long-term loan
Accounts payable
Company tax payable
Dividends payable
Additional information
All purchases and sales of inventories are on credit.
☐ There were 450 000 ordinary shares in issue during 2023.
◉
An interim dividend of R50 000 was paid on 30 June 2023.
◉ Credit terms to debtors were 30 days whilst creditors have granted credit terms of 60 days.
☐ Inventories were replaced after approximately 30 days during 2022.
R
1 280 000
?
680 000
8 000
900 000
172 000
658 000
220 000
72 000
60 000
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