QUESTION TWO Mumba Limited and Chikosi Limited are both insurance enterprises, but seem to take a different approach to trading. The following information has been calculated in respect of both businesses. Ratio Mumba Ltd Chikosi Ltd Current ratio 2:1 1.5:1 1.7:1 0.7:1 20% 12% Acid test ratio Return on capital employed Trade receivables settlement period Trade payables settlement period Gross profit margin Operating profit margin Cash conversion cycle 63 days 58 days 21 days 45 days 15% 40% 10% 10% 104 days 50 days Required: (a) Describe what this information indicates about the differences in approach between the two businesses. [25 Marks] (b) If one of them prides itself on personal service, and one of them on competitive prices. Which business do you think engages in personal service and which one engages on competitive prices? Give reasons for your answer? [25 Marks] [Total: 50 Marks]