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QUESTION ONE $[25]$

Landline Corporation Ltd$\mathrm{’}$s Statement of Financial Position for the $2023$ and $2024$ financial years are as follows:

Assets $2024\text{Â }($R$)\text{Â }2023\text{Â }($R$)$

Non$-$Current Assets $5\text{Â }000\text{Â }000\text{Â }3\text{Â }800\text{Â }000$

Inventory $500\text{Â }000\text{Â }700\text{Â }000$

Receivables $350\text{Â }000\text{Â }420\text{Â }000$

Cash $280\text{Â }000\text{Â }140\text{Â }000$

$6\text{Â }130\text{Â }000\text{Â }5\text{Â }060\text{Â }000$

Equity and Liabilities

Share Capital $($R$2$ shares$)\text{ }2\text{ }600\text{ }000\text{ }1\text{ }700\text{ }000$

Retained Income $500\text{Â }000\text{Â }940\text{Â }000$

Long term Debt $2\text{Â }000\text{Â }000\text{Â }1\text{Â }800\text{Â }000$

Payables $1\text{Â }030\text{Â }000\text{Â }620\text{Â }000$

$6\text{Â }130\text{Â }000\text{Â }5\text{Â }060\text{Â }000$

The abbreviated Statement of Comprehensive Income for the year ended $2024$ reflects the following:

R

Sales $(75\%$ on credit$)\text{ }2\text{ }400\text{ }000$

Cost of sales $1\text{Â }600\text{Â }000$

Depreciation $62\text{Â }000$

Interest expense $96\text{Â }000$

Tax $(30\%)\text{Â }160\text{Â }000$

Net Income after tax $300\text{Â }000$

Dividends $240\text{Â }000$

Retained Income $60\text{Â }000$

NB: Their shares are currently trading at R$3$ per share.

Required:

$1\mathrm{.}1.$ Calculate the gross profit margin and net profit margin. $(4)$

$1\mathrm{.}2.$ Calculate the Earnings Per Share $($EPS$)$ and Dividends Per Share $($DPS$)$ for the current year. Explain what occurs to the difference between the EPS and the DPS value. $(6)$

$1\mathrm{.}3.$ Calculate the return on equity. Will shareholders be happy with this return? Explain.

$(2)$

$1\mathrm{.}4.$ Calculate and comment on the acid test ratio for both years. $(5)$

$1\mathrm{.}5.$ Calculate and comment on the debt equity ratio for both years. $(5)$

$1\mathrm{.}6.$ Calculate the stock turnover rate and explain the meaning of this ratio. $($

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