Brown Plc is a retailer company. In early 2019, the company extended its opening hours in a bid to reduce stock wastage and increase sales and profits. The following shows extracts from the financial statements of the company for 2018 and 2019.

Balance sheet (m) As of 31 December 2019 2018 Non-current assets 9,000 8,100 Cash 114 80 Accounts receivable 339 250 Inventory 869 790 Current assets 1,322 1,120 Total assets 10,322 9,220 Accounts payable 3,724 2,800 Current liabilities 3,724 2,800 Non-current liabilities 298 520 Total liabilities 4,022 3,320 Total equity 6,300 5,900 Total liabilities and equity 10,322 9,220

Income statement (m) 2019 2018 Revenue 32,500 24,000 Cost of sales 27,625 20,400 Gross profit 4,875 3,600 Operating expenses 2,925 2,160 Profit before interest and tax 1,950 1,440

Required: a. Explain what inventory days represents and work out the inventory days for 2018 and 2019. Comment on whether the firm has made progress on its goal of reducing stock wastage in 2019. b. Explain what days-sales-outstanding represents and work out the days-sales-outstanding for 2018 and 2019. Comment on whether the customer payment terms are likely to have changed in 2019. c. State the formulae for capital employed from operating and financing perspectives, respectively. Work out the value for capital employed for 2018 and 2019 from each perspective. Show your workings clearly. ( d. Explain what asset turnover shows and work out its values for 2018 and 2019. Comment on the effect of the longer opening hours on the asset turnover. e. Explain what operating margin shows and work out its values for 2018 and 2019. Comment on the effect of the longer opening hours on the operating margin. f. Define return on capital employed (ROCE) in terms of operating margin and asset turnover. Using your answers from d) and e), calculate the ROCE for 2018 and 2019. Explain what factors were responsible for the change in ROCE in 2019.