INFORMATION
The extracts of the financial statements of Disney Limited for 2020 and 2021 are provided below.
Disney Limited
Statement of Comprehensive Income for the year ended 31 December 2021
R
Sales 1 960 000
Cost of sales 1 240 000
Operating profit 472 000
Interest expense 48 000
Profit before tax 424 000
Profit after tax 305 280
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
2021 (R) 2020 (R)
Assets
Non-current assets 2 320 000 1 960 000
Inventories 720 000 440 000
Accounts receivable 360 000 500 000
Cash and cash equivalents 440 000 340 000
3 840 000 3 240 000
Equity and liabilities
Equity 2 960 000 2 040 000
Non-current liabilities 480 000 820 000
Accounts payable 400 000 380 000
3 840 000 3 240 000
Additional information
1. The profit after tax for the year ended 31 December 2020 was R240 000.
2. All purchases and sales of inventories are on credit.
Will the company be able to pay its short-term debts if business conditions are unfavourable? Use
an appropriate ratio to motivate your answer.
3.2 Comment on the returns of the shareholders on their investments (expressed to two decimal
places) over the two-year period (2021 and 2022). Motivate your answer with the relevant
calculations.
3.3