1 Osprey Ltd manufactures office products, selling to retailers across the UK. It is well established in the industry, but it's results in recent years have stagnated. Below is a summary of its financial statements for the year ended 30 June 2022 and 2021 and a number of pre-calculated ratios. Revenue for the year ended 30 June 2021 was below budgeted performance so the directors introduced three strategies during the year ended 30 June 2022, with the aim of improving performance. 1. Reduced selling prices 2. Extending credit terms to customers 3. Investment in additional equipment to increase manufacturing capacity Statements of profit or loss for year ended 30 June 2022 2021 Revenue 1,391,820 1,159,850 Cost of sales (1,050,825) (753,450) Gross profit 340,995 406,400 Operating expenses (161,450) (170,950) Operating profit 179,545 235,450 Interest expense (10,000) (14,000) Profit before tax 169,545 221,450 Tax (50,800) (66,300) Profit for the year 118,745 155,150 Statements of financial position as at 30 June Property, plant and equipment Inventories 2022 2021 459,590 341,400 109,400 88,760 Page 2 of 9 Receivables 419,455 206,550 Cash 95,400 988,445 732,110 Share capital 100,000 100,000 Share premium 20,000 20,000 Retained earnings 376,165 287,420 Long term borrowings 61,600 83,100 Trade payables 295,480 179,590 Overdraft 80,200 Tax payable 55,000 62,000 988,445 732,110 Ratios 2022 2021 Gross profit margin 24.5% 35.0% Operating profit margin 12.9% 20.3% Inventory days ? ? Receivables settlement period ? ? Payables settlement period ? ? Current ratio 1.23:1 1.62:1 Gearing (measured as debt + capital ? ? employed) You have been employed as a consultant to advise the directors as to whether their strategies to improve performance have been successful. Requirements: a) Calculate the 4 missing ratios as shown in the table. You must show all workings. (8 marks) b) Assess the performance and position of Osprey for the year ended 30 June 2022, comparing to the prior year, and advise the directors on the impact of their strategies and any concerns you may have. Your answer should include a short conclusion. (12 marks) Total 20 marks Page 3 of 9