Bradbury Ltd is a family-owned clothes manufacturer based in the south west of England. For a number of years the chairman and managing director was David Bradbury. During his period of office, sales revenue had grown steadily at a rate of 2 to 3 per cent each year. David Bradbury retired on 30 November 2009 and was succeeded by his son Simon. Soon after taking office, Simon decided to expand the business. Within weeks he had successfully negotiated a five-year contract with a large clothes retailer to make a range of sports and leisurewear items. The con-tract will result in an additional £2 million in sales revenue during each year of the contract. To fulfil the contract, Bradbury Ltd acquired new equipment and premises. Financial information concerning the business is given below:

Dividends of £120,000 were paid on ordinary shares in respect of each of the two years.
Required:
(a) Calculate, for each year (using year-end figures for statement of financial position items), the following ratios:
1 operating profit margin
2 return on capital employed
3 current ratio
4 gearing ratio
5 trade receivables settlement period
6 sales revenue to capital employed.
(b) Using the above ratios, and any other ratios or information you consider relevant, comment on the results of the expansion programme.

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Income statements for the year ended 30 November 2009 2010 £000 £000 Revenue 9,482 11,365 1,042 Operating profit Interest charges 914 (22) (81) Profit before taxation 892 961 Taxation (358) 534 (386) Profit for the year 575 Statements of financial position as at 30 November 2009 2010 £000 £000 ASSETS Non-current assets Property, plant and equipment at cost less depreciation Premises 5,240 7,360 Plant and equipment 2,375 7,615 4,057 11,417 Current assets Inventories 2,386 3,420 4,280 7,700 19,117 Trade receivables 2,540 4,926 12,541 Total assets EQUITY AND LIABILITIES Equity Share capital 2,000 2,000 8,268 10,268 Reserves 7,813 9,813 Non-current liabilities Borrowing - loans 1,220 3,675 Current liabilities Trade payables 1,157 2,245 193 Taxation 179 Short-term borrowings (all bank overdraft) 172 2,736 5,174 19,117 1,508 12,541 Total equity and liabilities