The appropriate term here is liquidity. Liquidity measures a company's ability to meet its short-term obligations with its most liquid assets.

The relevant term is return on equity. Return on equity (ROE) indicates how effectively management is using a company’s assets to create profits and how much profit is generated for shareholders.

The term that fits this question is gearing. Gearing refers to the ratio of a company's debt to its equity, showing how much of the company's capital is financed through borrowed funds.

Retained Income Note to the Balance Sheet

Balance on 1 March 2018: R141,500

Net profit after tax: R683,900

Funds used for repurchase of shares:

• 60,000 shares at R9.06 = R543,600

Ordinary share dividends:

• Interim: 1,000,000 shares at R0.25 = R250,000
• Final dividends not stated but calculated as R456,800

Balance on 28 February 2019:

• Opening balance + Net profit - Dividends
• R141,500 + R683,900 - R456,800 = R368,600

Cash Effects of Investing Activities

Fixed assets purchased: R580,400
Proceeds from sale of fixed assets: R111,800
Net cash used in investing activities:

• R580,400 - R111,800 = R468,600

Net Change in Cash and Cash Equivalents

• Calculate cash equivalents at both beginning and end:
  Beginning: R378,300
  End: R260,180
• Net change = R260,180 - R378,300 = -R118,120

Acid-Test Ratio

ext{Acid-Test Ratio} = rac{ ext{Current Assets} - ext{Inventories}}{ ext{Current Liabilities}}
Substituting values:

• = rac{(288,300 - 125,000)}{553,600} = 0.28:1

Debt-Equity Ratio

ext{Debt-Equity Ratio} = rac{ ext{Total Debt}}{ ext{Total Equity}}
Substituting values:

• = rac{(1,000,000 + 1,400,000)}{7,557,000} = 0.31:1

% Return on Average Shareholders’ Equity (ROSHE)

ext{ROSHE} = rac{ ext{Net Income}}{ ext{Average Shareholders' Equity}} imes 100
Substituting values:

• Avg. Equity = (7,700,000 + 7,557,000)/2
• = rac{(683,900)}{7,628,500} imes 100 ext{ = 8.96 ext{%}}

1. Current Ratio: Increased from 0.7:1 to 1.8:1, indicating a better ability to pay short-term obligations.
2. Acid-Test Ratio: Increased from 0.4:1 to 1:1, showcasing better liquidity excluding inventories.
3. Debtors' Collection Period: Improved from 39 days to 28 days, reflecting improved cash flow from account receivables.

• Gearing Effect: Gearing has increased as indicated by the higher debt-equity ratio from 0.1:1 to 0.2:1.
• Risk Implication: The increased percentage of debt relative to equity raises financial risk; with interest at 13.5%, this impacts profitability from borrowing costs.

The payout ratio decreased from 96.4% to 66.2%, reflecting a strategic decision to retain more earnings for future growth.
Reason for Shareholder Satisfaction: Shareholders likely appreciated this focus on re-investment which, along with EPS improvement to R0.47, enhances long-term value.

Martha’s shareholding benefited as the total shares decreased to 940,000 after the repurchase, thereby increasing her ownership percentage:

• Initial shares owned: 475,000 (50% before) to 475,000 / 940,000 ≈ 50.53%.
  This increase in the share ownership fraction enhances her earnings per share and influence within the company.