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Sedap Rasa Berhad which is in the fine dining business has become increasingly concerned over its liquidity position in recent months due to the
Sedap Rasa Berhad which is in the fine dining business has become increasingly concerned over its liquidity position in recent months due to the negative impact from Covid-19 pandemic. The most recent set of financial statements for the business are as follows: Statement of Profit and Loss for the period ended 31 December 2020 Sales Less: Cost of sales Opening stock Purchases Closing stock Gross profit Expenses Net loss RM 170,000 465,000 635,000 (165,000) RM 550,000 (470,000) 80,000 (90,000) (10,000) Non-Current Assets Premises Fixtures and fittings Motor vehicles Current Assets Stocks Debtors Total Assets Financed by: Capital Retained profit Statement of Financial Position as at 31 December 2020 Non-Current liabilities Loans Current liabilities Creditors Bank overdraft Cost RM 610,000 85,000 105,000 800,000 Cumulative Depreciation RM (300,000) (40,000) (35,000) (375,000) 165,000 183,000 120,000 160,000 146,000 174.000 Net Book Value RM 310,000 45,000 70,000 425.000 348,000 773,000 280,000 173,000 320,000 773,000 (c) State what steps might be taken to improve the operating cash cycle.
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