SECTION A - Answer BOTH questions in this section Question 1 Naturalistic plc is a British manufacturer of garden sheds, summer houses, gates and benches. The company has built a good reputation for its high quality products and employed a large number of highly skilled carpenters and apprentices. The high standard of craftmanship has enabled Naturalistic plc to charge a premium price for its products. The majority of Naturalistic plc's sales are to retail customers (home and garden centres), hotel chains and public projects like parks and schools. At the start of 2021, Naturalistic plc launched a new strategy in order to expand the business. They obtained a large bank loan to update the production facilities and invest more heavily on marketing and sales. The company also offered a longer credit period to the key retail customers in order to encourage sales. Extracts of Naturalistic plc's financial statements for 2020 and 2021 are shown at the end of this question. Required: (A) For Naturalistic plc, calculate the following ratios for 2020 and 2021. Workings and formulae used must be clearly stated. (i) Operating Profit Margin (ii) Return on Capital Employed (iii) Trade Receivables Turnover (in days) (iv) Trade Payables Turnover (in days) (v) Inventory Turnover (in days) (vi) Working capital conversion cycle (in days) (10 marks) (B) Using the ratios calculated for Naturalistic plc in (A) and the information from the financial statements, assess the performance of the company in 2020 and 2021. You should relate your performance assessment to the new strategy that Naturalistic plc launched in 2021. Word count guidance for Part (B): 200-220 words (6 marks) (C) Woody plc, a key competitor of Naturalistic plc, has adopted a cost-leadership strategy. Through a market intelligence company, Naturalistic plc has obtained the ratios of Woody plc, as given below. Use these ratios, compare Woody plc's performance with Naturalistic plc's and suggest two practical changes that Naturalistic plc could make to maintain competitiveness. Word count guidance for Part (C): 300-350 words (9 marks) Naturalistic plc - Statement of Financial Position Extracts SECTION A - Answer BOTH questions in this section Question 1 Naturalistic plc is a British manufacturer of garden sheds, summer houses, gates and benches. The company has built a good reputation for its high quality products and employed a large number of highly skilled carpenters and apprentices. The high standard of craftmanship has enabled Naturalistic plc to charge a premium price for its products. The majority of Naturalistic plc's sales are to retail customers (home and garden centres), hotel chains and public projects like parks and schools. At the start of 2021, Naturalistic plc launched a new strategy in order to expand the business. They obtained a large bank loan to update the production facilities and invest more heavily on marketing and sales. The company also offered a longer credit period to the key retail customers in order to encourage sales. Extracts of Naturalistic plc's financial statements for 2020 and 2021 are shown at the end of this question. Required: (A) For Naturalistic plc, calculate the following ratios for 2020 and 2021. Workings and formulae used must be clearly stated. (i) Operating Profit Margin (ii) Return on Capital Employed (iii) Trade Receivables Turnover (in days) (iv) Trade Payables Turnover (in days) (v) Inventory Turnover (in days) (vi) Working capital conversion cycle (in days) (10 marks) (B) Using the ratios calculated for Naturalistic plc in (A) and the information from the financial statements, assess the performance of the company in 2020 and 2021. You should relate your performance assessment to the new strategy that Naturalistic plc launched in 2021. Word count guidance for Part (B): 200-220 words (6 marks) (C) Woody plc, a key competitor of Naturalistic plc, has adopted a cost-leadership strategy. Through a market intelligence company, Naturalistic plc has obtained the ratios of Woody plc, as given below. Use these ratios, compare Woody plc's performance with Naturalistic plc's and suggest two practical changes that Naturalistic plc could make to maintain competitiveness. Word count guidance for Part (C): 300-350 words (9 marks) Naturalistic plc - Statement of Financial Position Extracts