Browns plc is a national supermarket chain selling food, clothes and household appliances with a 31...

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Browns plc is a national supermarket chain selling food, clothes and household appliances with a 31 December year end. The finance director would like the management accountant to prepare some financial data and analysis to present to the board. He has provided the management accountant with extracts from the financial statements to assist him in his analysis. Extracts from the Statement of Profit or Loss for the year ended 31 December 2019 (with comparatives) Revenue Cost of sales Gross profit Non-current assets Inventories 2019 £m Total current assets Trade payables Total current liabilities Non-current liabilities Equity 20,510 (18,970) 1,540 650 (200) Operating profit Finance costs Extracts from the Statement of Financial Position as at 31 December 2018 (with comparatives) 2019 £m 2018 £m 9,100 850 1,570 2,100 2,920 3.250 4.500 17.835 (16,835) 1,000 530 (130) 2018 £m 8.390 1,000 1,610 2,280 2,650 2.530 4.820 Ratios Gross profit margin Operating profit margin Current ratio Quick ratio Inventory holding period (days) Payables payment period (days) 1) 2) The finance director has also supplied the following information regarding event in the year ended 31 December 2019: . 3) In the year ended 31 December 2019, 40% of customers purchased at least one clothing item during the year, whereas in the year ended 31 December 2018, only 20% of customers did. . 4) A strong marketing campaign took place during the year. 5) The new strengthened Grocery Supplier Code of Practice came into force to improve grocery retailers' treatment of suppliers in terms of fairer prices. ● 2018 Calculate the ratios below for the year ended 31 December 2019, stating whethe each has improved or deteriorated and provide one possible reason for the movement in each ratio: . 5.6% 3.0% 0.6 ● 0.23 22 days 49 days • Online food home delivery increased by 25%. The number of stores grew by 10% in the year. This was financed by long- term borrowings. Gross profit margin Operating profit margin Current ratio Quick ratio Inventory holding period Payables payment period (36 marks; 2 marks for each calculation and 4 marks for each explanation) Explain why it would not be as relevant to calculate receivables collection period in this example? (4 marks; holistic marking) Browns plc is a national supermarket chain selling food, clothes and household appliances with a 31 December year end. The finance director would like the management accountant to prepare some financial data and analysis to present to the board. He has provided the management accountant with extracts from the financial statements to assist him in his analysis. Extracts from the Statement of Profit or Loss for the year ended 31 December 2019 (with comparatives) Revenue Cost of sales Gross profit Non-current assets Inventories 2019 £m Total current assets Trade payables Total current liabilities Non-current liabilities Equity 20,510 (18,970) 1,540 650 (200) Operating profit Finance costs Extracts from the Statement of Financial Position as at 31 December 2018 (with comparatives) 2019 £m 2018 £m 9,100 850 1,570 2,100 2,920 3.250 4.500 17.835 (16,835) 1,000 530 (130) 2018 £m 8.390 1,000 1,610 2,280 2,650 2.530 4.820 Ratios Gross profit margin Operating profit margin Current ratio Quick ratio Inventory holding period (days) Payables payment period (days) 1) 2) The finance director has also supplied the following information regarding event in the year ended 31 December 2019: . 3) In the year ended 31 December 2019, 40% of customers purchased at least one clothing item during the year, whereas in the year ended 31 December 2018, only 20% of customers did. . 4) A strong marketing campaign took place during the year. 5) The new strengthened Grocery Supplier Code of Practice came into force to improve grocery retailers' treatment of suppliers in terms of fairer prices. ● 2018 Calculate the ratios below for the year ended 31 December 2019, stating whethe each has improved or deteriorated and provide one possible reason for the movement in each ratio: . 5.6% 3.0% 0.6 ● 0.23 22 days 49 days • Online food home delivery increased by 25%. The number of stores grew by 10% in the year. This was financed by long- term borrowings. Gross profit margin Operating profit margin Current ratio Quick ratio Inventory holding period Payables payment period (36 marks; 2 marks for each calculation and 4 marks for each explanation) Explain why it would not be as relevant to calculate receivables collection period in this example? (4 marks; holistic marking)