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1. All purchases and sales of inventories are on credit.

2. Inventories amounted to R600 000 on 31 December 2020.

3. The ordinary shares were all issued at R4 each.

4. Credit terms to debtors are 30 days.

Answer the questions from the information provided.

3.1.5 The amount of time it takes for the company to settle its debts arising from credit purchases. (2 marks)

3.1.6 A measure of the companys ability to pay its short-term obligations within one year. (2 marks)

\begin{tabular}{|l|r|} \hline FINCH LIMITED & \multicolumn{2}{l|}{} \\ \hline STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 2021 & R \\ \hline & 2400000 \\ \hline Sales & 1500000 \\ \hline Cost of sales & 540000 \\ \hline Operating profit & 60000 \\ \hline Interest expense & 480000 \\ \hline Profit before tax & 336000 \\ \hline Profit after tax & \\ \hline FINCH LIMITED & R \\ \hline STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 & 2850000 \\ \hline Assets & 915000 \\ \hline Non-current assets & 360000 \\ \hline Inventories & 690000 \\ \hline Accounts receivable & 4815000 \\ \hline Cash and cash equivalents & 3000000 \\ \hline Total assets & \\ \hline Equity and liabilities & \\ \hline Ordinary share capital & \\ \hline \end{tabular} \begin{tabular}{|l|r|} \hline Retained earnings & 705000 \\ \hline Non-current liabilities & 600000 \\ \hline Current liabilities (Accounts payable only) & 510000 \\ \hline Total equity and liabilities & 4815000 \\ \hline \end{tabular}

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