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Cloud Accounting (Pty) Ltd is a financial services business that supports small and medium businesses. The companys particular focus is on smart technology for business. They offer accounting solutions that use cutting-edge technology, as well as consult to clients on embracing smart technology systems. Due to the excellent service and expertise the business offers, it has experienced high growth in sales over the past two years. It has employed more people, purchased more office space, and purchased more technology hardware and software. In addition, Cloud Accounting has opened a new division that develops smart accounting Apps to assist its clients. A fair amount has been spent on research, although the company is now earning revenue from the products. You have been asked to analyse the financial statements of Cloud Accounting (Pty) Ltd, and provide feedback on its liquidity, efficiency, profitability and solvency. The financial statements for the year ended 28 February 2021 and 2020 are shown below. Cloud Accounting (Pty) Ltd Statement of Comprehensive Income for the year ended 28 February 2021 R'000 2021 2020 Revenue (Fee income) 58 000 35 000 Cost of services (33 000) (17 000) Gross profit 25 000 18 000 Administrative costs (4 100) (3 400) Sales and marketing (4 900) (4 000) Research costs (5 000) (2 500) Profit before interest and tax (EBIT) 11 000 8 100 Less: Interest expense (2 600) (700) Profit before taxation 8 400 7 400 Less: Taxation (2 352) (2 072) Profit for the year 6 048 5 328 Cloud Accounting (Pty) Ltd Statement of Financial Position for the year ended 28 February 2021 R'000 ASSETS 2021 2020 2019 Non-current assets 62 000 41 000 30 000 Property, plant, equipment 55 000 40 000 30 000 Intangible assets 7 000 1 000 - Current assets 13 500 7 833 5 000 Accounts receivable 13 500 5 833 4 500 Cash & cash equivalents - 2 000 500 TOTAL ASSETS 75 500 48 833 35 000 EQUITY AND LIABILITIES Equity and reserves 36 800 34 933 31 000 Share capital 30 000 30 000 28,000 Retained income 6 800 4 933 3 000 Non-current liabilities 26 000 7 000 2 000 Long-term loan 26 000 7 000 2 000 Current liabilities 12 700 6 900 2 000 Accounts payable 9 700 6 900 2 000 Bank overdraft 3 000 - - TOTAL EQUITY AND LIABILITIES 75 500 48 833 35 000 Additional information: 70% of sales are on credit. There are 365 days in a year. Required: You have been asked to prepare a report on the companys liquidity, efficiency and solvency for the year. You need to calculate the following ratios for the 2020 and 2021 years: 3.1 Liquidity ratio (4) 3.2 Gross margin (4) 3.3 Net margin (3) 3.4 Return on assets (4) 3.5 Return on equity (4) 3.6 Debtors collection period (4)

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