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QUESTION TWO [30] Makossa (Pty) Ltd. operates in the manufacturing industry. The company constructs car parts and protective structures for motor vehicles in homes, large offices, and factories. The company was established in 1933 by entrepreneur, Manu Dibango, it developed through aggressive marketing and has branches throughout South Africa. After a brief listing on the development Capital Market, it obtained a listing on the main board of the JSE Securities Exchange in 2013. The summarised balance sheet and income statement for the financial year ended 30 September 2017 have been obtained for analysis. The dividend paid during the financial year amounted to R50 000. Makossa Ltd's Statement of comprehensive income for the year ended 30 September 2018. 2018 2017 Revenue (all sales are on credit) R1 700 000 1 000 000 Less: Cost of sales (50 % on credit) 1 000 000 400 000 Gross profit 700 000 600 000 Less: Operating expenses Selling expense R70 000 50 000 General and administrative expenses 120 000 60 000 Lease expense 40 000 10 000 Depreciation expense 100 000 50 000 Less: Total operating expense R 330 000 170 000 Profit from operations (EBIT) 370 000 430 000 Less: Finance cost 70 000 120 000 Net profit before tax R 300 000 R 310 000 Less: Income tax expense 90 000 93 000 Profit for the year R 210 000 R217 000 Makossa Limited's Statement of financial position as at 30 September 2018. 2018 2017 ASSETS Noncurrent assets Plant and equipment Property and machinery Furniture and fixtures Vehicles Other noncurrent assets Total gross noncurrent assets (at cost) Less: Accumulated depreciation 1 200 000 850 000 300 000 100 000 50 000 2 500 000 1 050 000 800 000 220 000 80 000 50 000 2 200 000 1 200 000 1 300 000 1 200 000 1 000 000 Current assets Inventory Trade receivables 900 000 600 000 400 000 1 000 000 Cash 500 000 500 000 1 900 000 2 000 000 TOTAL ASSETS 3 200 000 2 900 000 EQUITY & LIABILITIES Equity Share capital Retained earnings Total equity 600 000 600 000 1 200 000 600 000 500 000 1 100 000 600 000 400 000 Noncurrent liabilities Long-term borrowings Current liabilities Trade payables Short-term borrowing Accruals 700 000 500 000 700 000 600 000 100 000 1 400 000 3 200 000 200 000 1 400 000 2 900 000 Total equity and liabilities 2.5 Stock turnover. 2.6 2.7 2.8 Gross profit margin. Net profit margin. Return on total assets. Return in equity. Comment on the ability of Makossa (Pty) Ltd. to manage its working capital. 2.9 2.10