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QUESTION 4 (20 Marks) REQUIRED 4.1 Use the information provided below to calculate the following ratios. Where applicable, express answers to two decimal places 4.1.1 Profit margin (2 marks) 4.1.2 Debtors collection period (2 marks) 4.1.3 Return on equity (2 marks) (2 marks) 4.1.4 Acid test ratio (2 marks) 4.1.5 Debt to assets (2 marks) 4.1.6 Return on assets (2 marks) 4.1.7 Interest coverage (4 marks) 4.2 Comment on the current ratio which was 1.56:1 in 2019 and 2.19:1 in 2020. 4.3 Provide two possible reasons for a drop in the gross margin from 27.35% in 2019 to 15.82% in 2020. (2 marks) INFORMATION Extracts of the financial statements of Sibaya Limited are as follows: SIBAYA LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Sales (all credit) Cost of sales Gross profit Operating expenses Operating profit Interest expense Profit before tax Income tax Profit after tax R 2409 000 (2 028 000) 381 000 (276 000) 105 000 (36 000) 69 000 (19 320) 49 680 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Non-current assets Current assets Shareholders' equity Non-current liabilities Current liabilities R 438 000 *981 000 588 000 384 000 447 000 * Note: Current assets include accounts receivable of R510 000 and inventories of R240 000

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