The managing director of Sparkrite Ltd, a trading business, has just received summary sets of financial statements for last year and this year:

Sparkrite Ltd Income statements for years ended 30 September last year and this year Last year This year

£000 £000 £000 £000 Sales revenue 1,800 1,920 Less Cost of sales Opening inventories 160 200 Purchases 1,120 1,175 1,280 1,375 Less Closing inventories 200 250 1,080 1,125 Gross profit 720 795 Less Expenses 680 750 Net profit 40 45 Balance sheets as at 30 September last year and this year Last year This year

£000 £000 £000 £000 Non-current assets 950 930 Current assets Inventories 200 250 Receivables 375 480 Bank 4 2 579 732 Less Current liabilities 195 225 384 507 1,334 1,437 Equity Fully paid £1 ordinary shares 825 883 Reserves 509 554 1,334 1,437 The finance director has expressed concern at the increase in inventories and receivables levels.

Required:

(a) Show, by using the data given, how you would calculate ratios that could be used to measure inventories and receivables levels during last year and this year.

(b) Discuss the ways in which the management of Sparkrite Ltd could exercise control over:
(i) inventories levels;
(ii) receivables levels.