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$2\mathrm{.}1$ Calculate the earnings retention ratio by using the EPS and DPS$.(3$ marks$)$

$2\mathrm{.}2$ Comment on the liquidity of the company by using TWO $(2)$ appropriate ratios. Your

calculations must take into account the correct disclosures of the investment and loan. $(6$ marks$)$

$2\mathrm{.}3$ Was the company efficient with its debt collection? Motivate your answer. $(3$ marks$)$

$2\mathrm{.}4$ Use an appropriate ratio to determine the percentage of non$-$current claims to ownership

claims. Your calculations must take into account the correct disclosure of the loan. $(3$ marks$)$

$2\mathrm{.}5$ Will shareholders be satisfied with the return on their investments? Motivate your answer. $(3$ marks$)$

$2\mathrm{.}6$ Identify TWO $(2)$ possible reasons for a drop in the gross margin experienced by Jephson Limited. $(2$ marks$)$ INFORMATION

The following financial statements and additional information were provided by Jephson Limited:

Jephson Limited

Statement of Comprehensive Income for the year ended $30$ September $2022$

R

Sales R$18000000$

Cost of sales R$(11900000)$

Gross profit R$6100000$

Operating expenses R$(3300000)$

Operating profit R$2800000$

Investment income R$?$

Interest expense R$(360000)$

Profit before tax R$2480000$

Income tax R$(744000)$

Profit after tax R$1736000$

Jephson Limited

Statement of Financial Position as at $30$ September $2022$

R

ASSETS

Non$-$current assets R$3000000$

Fixed$/$Tangible assets R$2600000$

Investment R$400000$

Current assets R$10000000$

Inventories R$6400000$

Accounts receivable R$3000000$

Cash R$600000$

Total assets R$13000000$

EQUITY AND LIABILITIES

Equity R$5800000$

Ordinary share capital R$4000000$

Retained earnings R$1800000$

Non$-$current liabilities R$2800000$

Loan: UBS Bank $(15\%)$ R$2800000$

Current liabilities R$4400000$

Accounts payable R$3400000$

Dividends payable R$1000000$

Total equity and liabilities R$13000000$

Additional information

$1.$ Ninety percent $(90\%)$ of all purchases and sales of inventories are on credit.

$2.$ The authorised share capital consists of $3000000$ ordinary shares of which $2000000$ have been

issued.

$3.$ Loan repayments are expected to reduce the loan balance by R$400000$ in the next financial year.

$4.$ The investment was expected to be redeemed on $31$ August $2023.$

$5.$ Depreciation for the year ended $30$ September $2022$ amounted to R$400000.$ There was no purchase or

disposal of fixed assets during the financial year.

$6.$ The credit terms to debtors are $30$ days.

$7.$ Interim dividends paid out during the financial year amounted to R$302000$

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