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QUESTION 2 Accounting

Mesra Enterprise and Selecte Enterprise are both engage in clothing retails business. The following are the financial information extract from the businesses as at 31 December 2019.

Mesra Enterprise

RM

Furniture & Fittings 1,452

Capital 96,000

Prepaid Commission Received 510

Sales 245,392

Accrued Rental 2,800

Gross Profit 61,348

Stock 1 November 2019 30,500

Cash 1,352

Bank Overdraft 7,096

Motor Vehicle 106,000

Mortgage 5,080

Trade Receivables 19,120

Net Profit 8,268

Trade Payables 29,120

Selecte Enterprise

Inventory Turnover 4 times

Gross Profit Margin 21.16%

Current Ratio 0.45

Return on Capital Employed 7.8%

Additional information:

1. The sales figures of Mesra Enterprise includes credit sales of RM125,934 during the year.
2. Stock at 30 October 2020 has the value of RM37,650 at cost and RM75,580 at market price.

Required:

Calculate the following for Mesra Enterprise:

1. Inventory Turnover

2. Return on Capital Employed

3. Gross Profit Margin

4. Current Ratio

5. Age of debtors

2. Based on the part (a) above, explain which business is performing better.

c)In your opinion, do you think the pandemic COVID-19 has negatively impact on Mesra Enterprise? Support your answer with evidence on the impacts and on the possible future of the business.