SECTION B ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS MARKS: 50 QUESTION 2: FINANCIAL INDICATORS FINANCIAL INDICATORS OF TWO COMPANIES INFORMATION You have R100 000 to invest on the JSE and you have narrowed your choice down to two listed companies. Their financial indicators for the year ended 28 February 2019 are provided in this activity. REQUIRED: Respond to the questions below, show your calculations and quote figures, ratios and percentages to support your comments/answers. 2.1 Number of shares & dividends: 2.1.1 Calculate the maximum number of shares you can afford to purchase in each company, use the current market value of shares from each company. (6) (4) 2.1.2 If dividends per share remain the same the following year, what is the amount of dividends you can expect from each company? Refer to 2.1.1 2.1.3 Apart from dividends, what other factors would you consider to be important in deciding on the company in which you should invest? List four points. (4) 2.2 Which company is handling its working capital more effectively? Quote three financial indicators supported by figures and explain why you will choose that (10) company. 2.3 Comment on the % return to shareholders and gearing OR the degree of risk of each company (Any two). Quote two financial indicators to support your opinion. (9) 2.4 Which company has the better dividend pay-out policy? Explain and quote figures or financial indicators to support your opinion. (7) -5 Comment on the value of the shares at the JSE for each company. Explain what will influence your decision to buy shares. (10) SBA - PROJECT TERM 2: 2019 Page 6 of​