Changes that possibly took place during 2019

Explain the changes that possibly took place during 2019 in respect of: (6 marks)
1.1.1 Financing activities (2 marks)
1.1.2 Investing activities. (4 marks)
1.2 Calculate the distribution costs for 2019. (2 marks)
1.3Of what significance is the statement of comprehensive income to potential investors? (2 marks)
1.4 If the interest rate on loans was 15% whilst the return on assets was 22%, how are the (3 marks)
shareholders likely to interpret this?
1.5 Critically assess the performance of the company from the information provided

INFORMATION
The statements of comprehensive income of Hemrock Ltd for 2019 and
2018 are provided
below:
HEMROCK LTD
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER:
2019 (R) 2018 (R)
Sales 4 500 000 4 000 000
Cost of sales (1 950 000) (1 700 000)
Gross profit 2 550 000 2 300 000
Other operating income 150 000 140 000
Distribution costs ? ?
Administrative expenses (600 000) (550 000)
Operating profit 600 000 540 000
Interest income 5 500 2 700
Interest expense (4 350) (8 800)
Profit before tax 601 150 533 900
Company tax (180 345) (160 170)
Profit after tax 420 805 373 730
Additional information

1. Depreciation for the year is as follows:
   2019: R200 000
   2018: R300 000
   Answer the questions from the information provided. (25 Marks)
   2.1 Use the information provided below to calculate the ratio for 2020 that would reflect each of the (17
   marks) following. Where applicable, round off answers to two decimal places.
   2.1.1 The extent to which the claims of short-term creditors are covered by assets that can be
   translated (2 marks) into cash in the short term
   2.1.2The extent to which long-term debt is covered by shareholders’ funds (3 marks)
   2.1.3 The amount of funds available relative to sales, to pay the company’s expenses other than its cost
   (3 marks) of sales
   2.1.4 The rand amount of distributions during the period on behalf of each ordinary share issued (3 marks)
   2.1.5An indication of the profit that has been put back into the company (3 marks)
   2.1.6 The amount that investors are willing to pay for each rand of the company’s earnings (3 marks)
   2.2 Provide TWO (2) ways of making an improvement with regard to each of the following ratios:
   (4 marks)
   2.2.1 Debtors collection period (2 marks)
   2.2.2 Operating margin. (2 marks)
   2.3 Comment briefly on the following ratios: (4 marks)
   2.3.1 Acid test ratio (2020 4.19:1 ; 2019