Reference no: EM132567951

The statement of comprehensive income for 2019 and 2018 given below were extracted from the accounting records of Tshabalala Ltd.

                                                                    Statement of comrehensive income                Statement of comrehensive income

                                                                    2019                                                           2018

Net sales                                                        1,003,600                                       901,300

Cost of sales                                                      (905,600)                                  (744,300)

Gross profit                                                          98,000                                       157,000

Selling, general and administrative expenses                 (92,000)                                 (65,000)

Income from operations                                            6,000                                     92,000

Other income/expenses

Non-operating income                                              124,500                                    18,000

Interest expense                                                     (90,500)                                  (57,000)

Profit before tax                                                       40,000                                      53,000

Income tax                                                               (12,000)                                  (15,900)

Net profit                                                                   28,000                                      37,100

Required:

Question 1: Refer to the statement of comrehensive income of Tsabalala Ltd for 2019 and 2018 and comment on the performance of the company including the operating profit earned. Take into account that the profit margin (percentage profit after tax to sales) for the industry was 4.51% in 2018 and 2.60% in 2019.

Question 2: Name three transactions that improves cash flow but does not increase profit.