QUESTION 2 (20 MARKS) The Wallbeans Group is a conglomerate of several small companies, all of which specialize in the m

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QUESTION 2 (20 MARKS) The Wallbeans Group is a conglomerate ofseveral small companies, all of which specialize in the manufactureand sale of a wide range of popular processed foods. The company’sshares have been trading steadily on the Johannesburg StockExchange for the past few years. As a result, a prospectiveinvestor has hired you as a financial consultant to provide anexpert opinion on whether they should go ahead with the investment.You believe that a good starting point would be an analysis of thecompany’s financial statements using ratio analyses. Theconsolidated Statement of Comprehensive Income and Statement ofFinancial Position of the group for the year ending 29 February2020 are given below: Statement of Comprehensive Income for theyear ending 29February 2020 2020 Rm 2019 Rm Continuing operationsSales revenue 2 526.3 2 066.9 Profit (earnings) before interest andtax 310.9 242.2 Finance costs (21.3) (18.5) 289.6 223.7 Income frominvestments 8.7 7.7 Share of profits of associates 0.0 0.1 Profitbefore tax 298.3 231.5 Income tax expense (109.5) (86.9) Profit forthe year from continuing operations 188.8 144.6 Discontinuedoperations Loss from discontinued operations 48.6 0.0 Profit forthe year 140.2 144.6 Other comprehensive income - - Totalcomprehensive income 140.2 144.6 Total comprehensive incomeattributable to: Owners of the company 104.7 109.9 Non-controllinginterests 35.4 34.6 Preference shareholders 0.1 0.1 140.2 144.6Statement of Changes in Equity as at 29 February 2020 2020 Rm 2019Rm Balance at 28 February 2019 296.7 227.2 Transfer from reserves0.0 1.6 Comprehensive income 104.7 109.9 401.4 338.7 Dividends 59.742.0 Balance as at 28 February 2020 341.7 296.7 Earnings per share3.58 2.62 Dividends per ordinary share 1.33 1.00 Statement ofFinancial Position as at 28 February 2020 2020 Rm 2019 Rm ASSETSNon-current assets Property, plant and equipment 683.1 594.2Investments 4.1 4.6 687.2 598.8 Current assets Inventories 489.6381.3 Receivables 361. 278.0 Holding and fellow subsidiaries 13.96.3 Cash assets 16.9 60.5 Total current assets 881.7 726.1 Totalassets 1 568.9 1 324.9 EQUITIES AND LIABILITIES Equity Sharecapital 271.7 202.9 Retained earnings 341.7 296.7 613.4 685.4Preference shares 1.0 1.0 Minority interest 37.3 184.8 Total equity651.7 685.4 Non-current liabilities Long-term borrowings 163.3 83.2Deferred tax 99.5 101.7 Total non-current liabilities 262.8 184.9Current liabilities Trade and other payables 427.7 315.8Shareholders for dividends 37.0 25.2 Current tax payable 91.9 75.9Holding and fellow subsidiaries 11.5 1.7 Short-term borrowings 86.337.0 Total current liabilities 654.4 455.6 Total Equity andLiabilities 1 568.9 1 325.9 Assume that there are 365 days in ayear Required: a) Using the following ratios,. i. Inventoryturnover (2 marks) ii. Average collection period (2 marks) iii.Total asset turnover (2 marks) iv. Debt ratio (2 marks) v. Timesinterest earned (2 marks) vi. Operating profit margin (2 marks)vii. Return on total assets (2 marks) b) Based on your answerscalculated in (a) above, comment on the group’s debt position, itsasset management performance, and its profitability performance in2020 as compared to 2019. (6 marks)