Bradburn plc was formed 5 years ago through a public subscription of ordinary shares. Daniel Brown, who owns 15% of the ordinary shares, was one of the organizers of Bradburn and is its current president. The company has been successful but it currently is experiencing a shortage of funds. On June 10, Daniel Brown approached the Hibernia Bank, asking for a 24-month extension on two £35,000 notes, which are due on June 30, 2019, and September 30, 2019. Another note of £6,000 is due on March 31, 2020, but he expects no difficulty in paying this note on its due date. Brown explained that Bradburn's cash flow problems are due primarily to the company's desire to finance a £300,000 plant expansion over the next 2 fiscal years through internally generated funds.
The commercial loan officer of Hibernia Bank requested financial reports for the last 2 fiscal years. These reports are reproduced below.

a Cash dividends were paid at the rate of £1 per share in fiscal year 2018 and £2 per share in fiscal year 2019.

a Depreciation charges on the plant and equipment of £100,000 and £102,500 for fiscal years ended March 31, 2018 and 2019, respectively, are included in cost of goods sold.
Instructions
a. Compute the following items for Bradburn plc.
1. Current ratio for fiscal years 2018 and 2019.
2. Acid-test (quick) ratio for fiscal years 2018 and 2019.
3. Inventory turnover for fiscal year 2019.
4. Return on assets for fiscal years 2018 and 2019. (Assume total assets were £1,688,500 at 3/31/17.)
5. Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2018 to 2019.
b. Identify and explain what other financial reports and/or financial analyses might be helpful to the commercial loan officer of Hibernia Bank in evaluating Daniel Brown's request for a time extension on Bradburn's notes.
c. Assume that the percentage changes experienced in fiscal year 2019 as compared with fiscal year 2018 for sales, cost of goods sold, and expenses will be repeated in each of the next 2 years and that the dividend amount will be held constant. Is Bradburn's desire to finance the plant expansion from internally generated funds realistic? Discuss.
d. Should Hibernia Bank grant the extension on Bradburn's notes considering Daniel Brown's statement about financing the plant expansion through internally generated funds? Discuss.

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Bradburn plc Statement of Financial Position March 31 Assets 2018 2019 Plant and equipment (net of depreciation) £1,449,000 £1,420,500 Inventories (at cost) 105,000 50,000 Accounts receivable (net) 131,800 125,500 Notes receivable 148,000 132,000 Cash 18,200 12,500 Total assets £1,852,000 £1,740,500 Equity and Liabilities Share capital ordinary (130,000 shares, £10 par) £1,300,000 £1,300,000 Retained earningsa 388,000 282,000 Accrued liabilities 9,000 6,000 Notes payable 76,000 61,500 Accounts payable 91,000 79,000 Total equity and liabilities £1,852,000 £1,740,500 Bradburn plc Income Statement For the Fiscal Years Ended March 31 2019 2018 Sales revenue £3,000,000 £2,700,000 Cost of goods solda 1,530,000 1,425,000 Gross margin 1,470,000 1,275,000 Operating expenses 860,000 780,000 Income before income taxes 610,000 495,000 Income taxes (40%) 244,000 198,000 Net income £366,000 £297,000